How MPC decision to retain MPR at 27.5% can rejuvenate Nigeria’s economy 

At the 300th Monetary Policy Committee (MPC) meeting, the Apex Bank’s highest decision-making body, decided to maintain interest rate at 27.5 percent; Omeiza Bilal looks at the merits of the committee’s decision.  

The Monetary Policy Committee of the Central Bank of Nigeria (CBN) has voted to leave 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 fragile economic recovery.

Before the meeting, some analysts were optimistic of a potential cut in interest rate, while many others believed that since there were no significant changes in the prices of goods in the market, based on the last report released by the Bureau of Statistics (NBA) that put the Nigeria’s annual inflation rate eased to 23.71% in first quarter of year 2025, hence there was no need for major cut in the interest rate.

Experts have opined that increasing rate may affect investments and growth of the economy. Already, we are seen what interest rate increase have done to manufacturing industries in servicing debt, it has prevented them from taking more loan to expand the business. According to them, maintaining the rate was the best decision. 

The committee decision to retain the rate is to monitor and assess existing monetary measures in place with continuous approach prevailing macroeconomic conditions. 

In its decision, the Committee kept the asymmetric corridor around the MPR at +500/-100 basis; the Cash Reserve Ratio (CRR) of Deposit Money Banks at 50.00% and that of Marchant Banks at 16.00%; and Liquidity Ratio remain at 30%.

Experts say the committee could not have done otherwise as the decision was based on positive outlook of macroeconomic indicators, in reference to the NBS April inflation report.  

The Governor Cardoso highlighted the unanimous decision of the committee members, describing it as a “conservative stance” meant to safeguard macroeconomic stability.

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

According to him it would enable the Committee to better understand the future development in the economy and also form part of their decision in the next MPC meeting.

“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.

Yunoos Suleiman, an Abuja based analyst and public commentator, hailed the Committee’s decision. He said it’s a reflection of the reality and expectation of investors, saying it’s an indication that the economy was recovering. 

Monetary authority can’t operate in isolation, the fiscal authority must match words with action to support the decisions of the monetary side as interest rate is muted. 

Cardoso acknowledged the government’s efforts at keeping food supply high, and intensifying security in the farming regions. Despite all these successes, the apex bank believes that high cost of electricity and the continuous pressure on foreign exchange and infrastructure deficit poses a major challenge for the gains made so far.

While welcoming the idea of boosting local production by the Federal government, analysts say the move will help reduce the pressure on foreign exchange and restore stability in the market. It’s exciting that the Bank is supporting any policies by the fiscal authority that is targeted at encouraging production, it would help to control inflation, and ease exchange rate pressures.

The Apex Bank helmsman noted that improved oil production would not only strengthen Nigeria’s current position, it would also positively impact the external reserves.

The MPC noted the stable and resilient banking sector.

With the assurances from the committee to sustain these measures to anchor inflation expectations, ease exchange rate pressure, deepen financial inclusion and enhance the efficiency of monetary policy mechanism, experts assert that the modest gains from ongoing reforms reflects cautious optimism among investors and growing confidence in the CBN’s market interventions.

The move, they said indicates confidence in the current trends, but flexibility remain key as new data emerges.