- Decision
- Maintain
- Rate change
- 0 bps
- monetary policy rate
- 27.5%
The Central Bank of Nigeria’s Monetary Policy Committee left the Monetary Policy Rate unchanged at 27.50 % at its 20 May 2025 meeting, judging that recent disinflation and firmer growth are offset by lingering price pressures from electricity costs, foreign-exchange demand and structural constraints. After holding the rate at the same level in February 2025, the MPC again kept the asymmetric corridor at +500/-100 bp, the cash-reserve ratio at 50 % for deposit money banks (16 % for merchant banks) and the liquidity ratio at 30 %. Headline inflation eased to 23.71 % y/y in April from 24.23 % in March as both food (21.26 %) and core (23.39 %) components moderated, while real GDP expanded by 3.84 % y/y in Q4 2024, up from 3.46 % in Q3, led by services and a rebound in oil and non-oil output; the committee also highlighted continued banking-sector resilience amid ongoing recapitalisation. Gross external reserves rose 2.85 % to USD 38.9 bn by 16 May, providing 7.6 months of import cover, and the balance of payments showed a USD 1.1 bn surplus in Q4 2024, though members cautioned that weaker crude prices threaten fiscal revenues. Globally, the MPC noted the IMF’s cut to 2025 world growth to 2.8 % amid policy uncertainty and trade tensions. While urging sustained foreign-exchange reforms and stronger export earnings, the committee signalled vigilant monitoring to anchor inflation expectations and contain exchange-rate pressures ahead.
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.