At its 297th meeting in September 2024, the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) resolved to raise the controlling monetary policy rate by 50 basis points to 27.25 percent, from 26.75 percent in July 2024.
Also, the committee decided to retain asymmetric corridor around the MPR at +500/-100 basis points; raise Cash Reserve Ratio (CRR) of Deposit Money Banks (DMBs) from 45 percent to 50 percent, and of Merchant Banks from 14 percent to 16 percent, while retaining Liquidity Ratio (LR) at 30 percent.
Since then, the policy parameters have largely remained unchanged to date, with the committee holding all rates during its 300th meeting held on May 19 and 20, 2025 in Abuja.
The the resolution by Committee only demonstrated consistency, in line with policy thrust anchored on compliance, by again deciding unanimously among its members to hold the policy rates unchanged.
For close watchers of the Olayemi Cardoso’s management at the apex bank, the decision to continue to hold the controlling policy rates in the banking sector can hardly be construed to be out of character.
Following his appointment and assumption of office in September 2023, one of the key components of Mr Cardoso’s new vision at the Bank was to deploy an inflation targeting framework to promote price stability to encourage investments, ensure strategic and transparent approach to the foreign exchange market to minimise volatility, while positively impacting the livelihoods of Nigerians.
The inflation targeting framework is part of a holistic strategy of the Cardoso-led leadership at the CBN to prioritise the fight against institutional deficiencies, restore corporate governance, strengthen financial regulations and prudent policies to foster price stability and growth.
The framework is characterised by an aggressive monetary policy stance aimed at tackling the country’s persist high inflation rates and adjusting interest rates and other monetary policy tools to help stabilise the financial system and the economy.
On Tuesday, during the post-meeting briefing, Mr Cardoso, who is also the Chairman of the MPC, reviewed the global and domestic economic landscape and weighed the impact of CBN’s monetary policy interventions.
With relative improvements observed in some key macroeconomic indicators to moderate prices in the near to medium term, the CBN governor referenced the National Bureau of Statistics (NBS), which said headline inflation (year-on-year) declined to 23.71 percent in April 2025, compared with 24.23 percent in March 2025.
On a month-on-month basis, the NBS said inflation also dropped from 3.9 percent in in March to 1.86 per cent in April 2025, with both food and core components being accountable.
Food inflation, the statistics agency said, eased further to 21.26 percent in April 2025 from 21.79 percent in March, while Core inflation also dropped to 23.39 percent in April 2025, compared with 24.43 percent in March.
Similarly, real GDP (year-on-year), the agency said, rose by 3.84 percent in the fourth quarter of 2024, compared with 3.46 percent in the preceding quarter, highlighting an improvement driven by growth in both the oil and non-oil sectors, with the services sector as the major contributor.
Besides, the NBS said gross external reserves increased by 2.85 percent to $38.90 billion as at May 16, 2025, from $37.82 billion at end-March 2025, representing an import cover of 7.6 months for goods and services.
In addition, the balance of payments (BOP) recorded a surplus of $1.10 billion in the fourth quarter of 2024, compared with $4.21 billion in the preceding quarter, on account of moderation in current account surplus.
These are all evidences of the improvements in some key macroeconomic indicators as a result of the inflation-targeting policy of the CBN.
The other improvements, the CBN governor pointed out, are manifested in the progressive bridging of the gap between the Nigeria Foreign Exchange Market (NFEM) and Bureau De Change (BDC) windows, the positive balance of payments position, and the reducing in the retail pump price of premium motor spirit (PMS), popularly called petrol.
Noting the increasing decline in food inflation across the country, he said the Committee commended the government for implementing measures to boost food supply as well as step up effort to combat insecurity, especially around farming communities.
Urging security agencies to sustain the momentum to combat insecurity in the country, he said the Committee wanted the government to provide the necessary inputs to farmers to further boost food production.
Acknowledging the growing inflationary pressures driven largely by high electricity tariffs, persistent foreign exchange demand and other legacy structural factors, Cardoso said the Committee noted some new policies introduced by the Federal Government to boost local production, mitigate FX demand pressures, to pave the way to a significant reduction in domestic prices.
With the relative stability noticed in the FX market, the CBN governor said the MPC called for the ongoing reforms to be sustained to further boost market confidence, adding the fiscal authority to strengthen current efforts at enhancing FX earnings, especially from natural gas, oil and non-oil exports.
The only area of concern, he pointed out, was the recent drop in crude oil prices as a result of increased production output by non-Organisation of Petroleum Exporting Countries (N-OPEC) members as well as uncertainties associated with recent U.S. trade policy, which posed significant challenges for fiscal receipts and budget implementation.
He reaffirmed the continued stability of the banking system with noticeable improvements in key performance indicators as well as observed progress in the ongoing recapitalization of banks in the country.
Mr Cardoso said the MPC members called for the sustenance its effective oversight of the industry by the Bank to ensure compliance with regulatory and macro-prudential guidelines.
Considering the positive impact recorded in the financial system, coupled with the growing uncertainty in the policy environment and ongoing global shocks, the CBN governor said the MPC was unanimous in its resolution to keep the benchmark monetary policy parameters unchanged, to ensure a better understanding of developments in near future.
