- Decision
- Maintain
- Rate change
- 0 bps
- monetary policy rate
- 27.5%
Nigeria’s Monetary Policy Committee on 22 July 2025 kept the Monetary Policy Rate at 27.50 %, arguing that an unchanged, tight stance is needed to “sustain the momentum of disinflation” and contain underlying price pressures; it also preserved the +500/-100 bp asymmetric corridor, banks’ cash-reserve ratios at 50 % (deposit money banks) and 16 % (merchant banks), and the 30 % liquidity ratio. The benchmark rate has been held at 27.50 % since at least February 2025. Annual headline inflation slowed for a third straight month to 22.22 % in June from 22.97 % in May, although month-on-month price growth edged up to 1.68 % and both food (21.97 % y/y) and core (22.76 % y/y) inflation firmed. Real GDP expanded by 3.13 % y/y in Q1 2025, PMI surveys signal continued growth momentum, and financial-system indicators remain stable, supported by a banking recapitalisation drive that eight lenders have already completed. International reserves rose to USD 40.11 bn by 18 July, equivalent to 9.5 months of goods import cover, amid stronger oil output, higher non-oil exports and lower imports that have steadied the foreign-exchange market. The committee warned that global tariff wars and geopolitical tensions could intensify supply-side pressures, and it pledged to maintain the current stance until risks to inflation subside while continuing close surveillance of economic and financial conditions.
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.