The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) opted to maintain all key monetary parameters, including the Monetary Policy Rate (MPR) at 27.5%, citing improvements in major economic indicators, particularly the rebased inflation figure.
Despite expectations of further tightening, analysts predict that a rate cut may be considered at the next MPC meeting scheduled for May 19–20, 2025.
Speaking at a press briefing, CBN Governor Olayemi Cardoso emphasized that the bank’s monetary policies have started yielding results, noting a gradual reduction in inflation, improved market confidence, and greater stability in the foreign exchange market.
“We are seeing inflation gradually slowing down, and market confidence is returning. Stability is crucial—without it, investors will hesitate to engage with our markets. As conditions improve, we will be better positioned to moderate rates,” Cardoso stated in Abuja.
MPC’s Unanimous Decision
All 12 MPC members voted to keep policy rates unchanged, including:
- MPR at 27.5%
- Asymmetric corridor at +500/-100 basis points
- Cash Reserve Ratio (CRR) at 50% for deposit money banks and 16% for merchant banks
- Liquidity ratio at 30%
This marks a shift from CBN’s aggressive rate hikes throughout 2024, which had been aimed at controlling inflation.
Inflation and Economic Indicators
The National Bureau of Statistics (NBS) recently reported a drop in Nigeria’s headline inflation rate to 24.48% in January, down from 34.80% the previous month. This decline is attributed to a rebasing exercise, which updated the base year from 2009 to 2024, aligning with current consumption patterns.
Cardoso commended the NBS for improving the accuracy of inflation data, emphasizing that the rebased figures reflect the true economic situation.
Foreign Exchange Stability & Investment Prospects
The Naira has shown improved competitiveness, attracting renewed investor interest. The MPC expects that recent policy measures will boost foreign direct investment (FDI), portfolio investments, and diaspora remittances, strengthening economic growth.
“We are seeing increased investor confidence, which is crucial for economic expansion. The Naira’s improved competitiveness makes Nigeria an attractive investment destination,” Cardoso noted.
Future Policy Outlook
Analysts believe the CBN could ease its tightening stance at the next MPC meeting. Dr. Muda Yusuf, CEO of the Centre for the Promotion of Private Enterprise (CPPE), noted that monetary policy rates should not exceed inflation rates for long periods.
“We anticipate a gradual relaxation of CBN’s tightening measures, including a potential reduction in the MPR and CRR in upcoming meetings,” Yusuf stated.
Stock Market Performance
The stock market saw mixed reactions:
- Gainers: Regency Alliance Insurance (+7.58%), The Initiates Plc (+7.23%)
- Losers: Union Dicon Salt (-9.77%), CWG (-5.75%)
Total trading volume surged 22.56% to 421.26 million units, valued at ₦8.42 billion across 13,269 deals.
With economic stability improving, investors and market participants will closely watch the CBN’s next steps in May.