- The Central Bank of Nigeria retained the interest rate at 27.50 per cent at the end of its 299th Monetary Policy Committee meeting
- The CBN said it targets single-digit inflation rate
- It said the improvement in some macroeconomic indices influenced its decision
The Central Bank of Nigeria (CBN) has retained the country’s benchmark interest rate at 27.50 per cent following the conclusion of its 299th Monetary Policy Committee (MPC) meeting in Abuja on Thursday, February 20.
The CBN governor, Olayemi Cardoso, who announced the MPC’s decision during a press briefing, said the committee unanimously held all monetary parameters as it assessed the economic outlook for 2025.
He said, “The committee was unanimous in its decision to hold all parameters and thus decided as follows: 1. Retain the MPR at 27.50 per cent. 2. Retain the asymmetric corridor around the MPR at +500/-100 basis points.
“3. Retain the Cash Reserve Ratio of Deposit Money Banks at 50.00 per cent and Merchant Banks at 16 per cent. 4. Retain the Liquidity Ratio at 30.00 per cent,” Cardoso said.
CBN targets single-digit inflation
The CBN governor noted that the orthodox monetary stance of the apex bank has resulted in positive outcomes, especially in taming soaring inflation.
He said the apex bank targets single-digit inflation in the medium to long term.
“We believe that inflation has been too high for too long. Our objective in the medium to long term is to ensure that we are able to bring it down from double to single digit,” Cardoso said.
Factors that influenced MPC’s hold decision
Cardoso further stated that the relative stability of the foreign exchange market, improvements in external reserves, a gradual moderation in fuel and food prices, and Gross Domestic Product (GDP) growth are the macroeconomic developments that influenced the MPC’s decision.
He stressed the need for continued collaboration between monetary and fiscal authorities to sustain recent macroeconomic improvements.
Cardoso said the MPC is confident that as food security measures improve, inflationary pressures, particularly those driven by food prices, will ease over time.
He said the recent measures adopted by the CBN in the foreign exchange market, such as the Electronic Foreign Exchange Matching System and the Nigeria Foreign Exchange Code, have helped stabilise the exchange rate.
Another economic observation considered by the committee is the convergence between the Nigeria Foreign Exchange Market and Bureau de Change rates, which has improved market transparency and liquidity.
The committee also noted a positive trend in oil production, which reached 1.54 million barrels per day in January 2025, as a key factor supporting external reserves, which stood at $39.4 billion as of February 14, 2025, translating to an import cover of 9.6 months.
It also noted that Nigeria’s GDP grew by 3.46 per cent in the third quarter of 2024, driven primarily by the non-oil sector, with the services industry playing a dominant role.
Decision pauses six consecutive hikes in 2024
The decision to retain the current interest rate and all parameters brings rate hikes to a pause after the MPC increased the rate six consecutive times in 2024, from 18.75 per cent in January 2024 to 27.50 per cent in November 2024.
The CBN stated that the 2024 rate hikes were to address inflationary pressures, exchange rate volatility, and economic growth concerns.
The apex bank said if not for its policy interventions, inflation in Nigeria could have surged to 42.81 per cent by December 2024.
Recall that the inflation rate reached 34.80 per cent in December from 34.60 in November 2024, but dropped to 24.48 per cent in January 2025 following the rebasing of the Consumer Price Index (CPI).
299th MPC meeting: Will CBN drop, hold, or hike interest rate?
Meanwhile, TheRadar earlier reported that the Monetary Policy Committee of the Central Bank of Nigeria would hold its 299th meeting on February 19 and 20 to determine the monetary policy decision and direction of the CBN.
Experts and analysts were left speculating about the direction of the CBN’s monetary decisions between dropping the rate, holding the current rate, or continuing its hike approach.
