CBN holds benchmark interest rate at 27.5%

The Central Bank of Nigeria (CBN) has voted to maintain the Monetary Policy Rate (MPR) at 27.5 percent, in a strategic move aimed at consolidating the early gains of recent monetary tightening amid Nigeria’s delicate economic recovery.

This decision, announced by CBN Governor Olayemi Cardoso during a press briefing on Tuesday, follows the conclusion of the 300th Monetary Policy Committee (MPC) meeting held in Abuja.

All 12 committee members voted unanimously to retain the key policy rates, signaling unified confidence in the current policy direction.

The MPC’s stance comes as Nigeria’s inflation rate saw a modest decline to 23.71 per cent in April 2025, down from 24.23 per cent in March, according to the National Bureau of Statistics (NBS).

While the deceleration is slight, the CBN attributes it to the lagging effects of earlier monetary tightening policies, which it believes need more time to fully permeate the economy.

Governor Cardoso described the decision as a “conservative stance” meant to safeguard macroeconomic stability.

“The retention of current rates provides an opportunity for previous measures to permeate the economy while we monitor key indicators such as inflation and exchange rate stability,” Cardoso said.

He also emphasized that the CBN remains focused on maintaining price stability, stabilizing the foreign exchange market, and bolstering investor confidence.

Market analysts and financial experts have largely welcomed the CBN’s decision as a prudent and data-driven approach.

Sina Dare, a Lagos-based economic analyst, said the move aligns with investor expectations and sends a positive signal to the financial markets.

“Holding the MPR at 27.5 percent will continue to support the naira, anchor inflation expectations, and bolster investor confidence in the Nigerian economy,” Dare noted.

However, concerns remain over deeper structural vulnerabilities. David Adonri, Vice Chairman of Highcap Securities, warned that persistent demand-side pressures could offset the CBN’s efforts without complementary reforms from other sectors of the economy.

“The outcome of the next MPC meeting may not reflect moderating inflation because foreseen threats to the economy require a proactive response,” Adonri said. “Demand-side pressure remains too high compared to supply.”

In its official communiqué, the MPC reiterated the importance of tighter coordination between fiscal and monetary authorities.

“While monetary tools have their limits, fiscal policy must play its part in addressing supply-side bottlenecks,” said Dr. Temitope Adebayo, a senior economist at the University of Lagos. “Without a balanced approach, the effectiveness of rate hikes may be muted.”

Ahead of the MPC meeting, the naira appreciated slightly in the official market, trading at N1,597/$1 on Monday, an improvement from N1,599.01/$1 the previous Friday.

The modest gain reflects cautious optimism among investors and growing confidence in the CBN’s market interventions. “The CBN’s move indicates confidence in current trends, but flexibility remains key as new data emerge,” said Adebayo. “All eyes will be on July to see if this early stabilization can hold.”