The Central Bank of Nigeria (CBN) retained its Monetary Policy Rate at 27.50%, on May 20, marking its second consecutive hold in 2025.
The CBN Governor Olayemi Cardoso announced the decision following the conclusion of the Monetary Policy Committee’s 300th meeting.
This second pause in rates comes after six consecutive hikes recorded in 2024.
According to Cardoso, “The Committee was unanimous in its decision to hold policy and thus decided as follows: Retain the MPR at 27.50%,” adding that the pause would enable members to better understand near-term economic developments.
With this move, the CBN retained the asymmetric corridor around the MPR at +500/-100 basis points, the Cash Reserve Ratio of Deposit Money Banks at 50.00%, and that of Merchant Banks at 16.00%, while keeping the Liquidity Ratio unchanged at 30.00%.
Monetary Policy Committee
The MPC Committee, led by the CBN governor, Olayemi Cardoso, is the bank’s highest policymaking committee.
Established in 1993 to direct the country’s monetary policies, the CBN’s 300th MPC meeting represents over thirty years of continuous monetary policy formulation. The CBN Act 2007 empowers the banks’ MPC Committee to determine Nigeria’s monetary policy parameters to ensure price stability.
The 300th MPC meeting was critical as the Nigerian economy grapples with inflation and naira volatility in foreign exchange markets.
At every MPC meeting, the committee members analyze various data and determine the benchmark interest rate. They also determine the Cash Reserve Ratio, the percentage of bank reserves held with the CBN, and the Liquidity Ratio.
These decisions from the MPC directly affect the Naira’s exchange rate, interest rates on loans & savings, inflation trends, investment flows, and the country’s broader macroeconomic direction.
Consequently, investors (domestic & foreign), financial institutions, and others will closely monitor the Central Bank of Nigeria’s decisions.
The CBN Governor typically chairs the MPC Committee meeting. Other members include four CBN Deputy Governors, two CBN Board of Directors members, two representatives from academia, two representatives from the private sector, and one from the Ministry of Finance.
CBN’s Interest Rates Decisions Since February 2024
| Date |
MPR Decision |
Reason(s) |
| Feb 27, 2024 |
Hiked to 22.75% |
Inflation nearing 30%; naira depreciation; urgent need to curb excess liquidity; restore investor confidence |
| Mar 26, 2024 |
Hiked to 24.75% |
Inflation continued rising above 33%; FX instability; Curb food price inflation |
| May 21, 2024 |
Hiked to 26.25% |
Inflation hit 33.6% in April; excess naira liquidity |
| Jul 23, 2024 |
Hiked to 26.75% |
Inflation reached 34.2% (highest); economic stabilization efforts |
| Sep 24, 2024 |
Hiked to 27.25% |
Persisting inflationary pressures |
| Nov 25, 2024 |
Hiked to 27.50% |
Renewed inflation rise from 32% in June to 33.9% in October; need for price stability |
| Feb 20, 2025 |
Held at 27.50% (No change) |
Inflation fell to 24.48% in January amid CPI rebasing |
Rationale for CBN Retaining Interest Rates at 27.50%
The MPC attributed its decision to recent improvements in economic indicators. According to the National Bureau of Statistics (NBS), headline inflation fell to 23.71% in April from 24.23% in March. Month-on-month inflation dropped from 3.9% to 1.9%. In addition, food inflation decreased to 21.26% from 21.79%. At the same time, core inflation also fell to 23.39% from 24.43%
The Committee noted these developments with cautious optimism. According to Cardoso, “The MPC noted the relative improvements in some key macroeconomic indicators which are expected to support the overall moderation in prices in the near to medium term.”
Cardoso also noted that Nigeria’s GDP grew by 3.84% in Q4 2024, up from 3.46% in Q3, driven by oil and non-oil sectors, especially services.
The MPC also discussed Nigeria’s external reserves, which rose by 2.9% to $38.90 billion as of May 16, up from $37.82 billion in March. The increase represents about 7.6 months of import cover.
Despite these dynamics, the CBN warned that falling crude oil prices due to rising production from non-OPEC countries and uncertainties around US trade policies could impact government revenues and national budget implementation.
Furthermore, the CBM also expressed concerns about lingering inflationary pressures driven by high electricity costs, persistent demand for foreign exchange, and structural issues within the economy.
The next MPC meeting is scheduled for July 21 and 22, 2025.
