- Decision
- Maintain
- Rate change
- 0 bps
- monetary policy rate
- 27.5%
The Monetary Policy Committee of the Central Bank of Nigeria on 20 February 2025 voted unanimously to keep the Monetary Policy Rate unchanged at 27.50 percent, judging that recent exchange-rate appreciation, lower petrol prices and anticipated food-supply improvements will help temper inflation even as food-price pressures persist. The asymmetric corridor was maintained at +500/-100 bp around the policy rate, alongside an unchanged 50 percent cash-reserve ratio for deposit money banks (16 percent for merchant banks) and a 30 percent liquidity ratio. Headline inflation stood at 34.80 percent y/y in December 2024 under the 2009 CPI base but, following a rebasing to a 2024 basket, measured 24.48 percent y/y in January 2025; real GDP expanded 3.46 percent y/y in Q3 2024, led by services, with both oil and non-oil sectors contributing. The committee cited a resilient banking system and highlighted external buffers, with foreign-exchange reserves at USD39.4 bn (9.6 months of import cover) and a USD6.06 bn current-account surplus in Q3 2024, supported by higher oil output of 1.54 mb/d in January. It noted ongoing geopolitical conflicts and rising global trade tensions as external risks, and pledged to sustain close monitoring of domestic and global developments while reinforcing policy coordination to secure price stability and growth.
Rate evolution
From July 2025 to July 2026, the Central Bank of Nigeria eased the Monetary Policy Rate by 100 basis points to 26.5 per cent, moving from an initial hold to cuts interrupted by pauses as disinflation progressed. The shift was driven first by a need to sustain disinflation despite persistent underlying price pressures and global trade and geopolitical uncertainty, then by stronger macroeconomic stability, with falling headline, food and core inflation, exchange rate stability, firmer reserves and capital inflows, improved food supply, moderating Premium Motor Spirit prices and resilient growth creating room to support recovery even as double-digit inflation and excess liquidity kept policy cautious.
After cutting by 50 basis points in February 2026 on a balanced assessment of risks, the Committee held in May as inflation rose for a second month, judging the pickup transitory and linked to Middle East-driven energy and logistics costs, while arguing that tightening, exchange rate stability, reserve buffers, enhanced food supply and banking-system resilience should restore disinflation. It retained the policy rate again in July after headline inflation eased marginally in June, ending three consecutive months of uptick, as renewed hostilities in the Middle East heightened uncertainty and upside risks to inflation through energy prices, even as core inflation moderated on exchange rate stability, reserves increased, policy coordination helped moderate the external shock and banking recapitalisation improved financial-system resilience, leaving policy cautious, vigilant and data-driven.
In September 2026, the Committee reset the Monetary Policy Rate at 23 per cent and recalibrated the Standing Facilities Corridor to 50 basis points above and 300 basis points below the policy rate, describing the measures as an operational realignment rather than a change in stance after divergence between the policy rate and market rates weakened transmission. It judged that three consecutive months of declining headline inflation, robust external reserve buffers, improved external sector fundamentals and stronger investor confidence provided headroom for the reset without undermining disinflation, while flagging prolonged Middle East tensions and election-related spending as upside risks and keeping future decisions data-dependent.