Abuja, Nigeria – The Central Bank of Nigeria (CBN) has maintained the Monetary Policy Rate (MPR) at 27 per cent, marking the fourth pause in 2025 as the apex bank prioritises stability amid a slowing, yet still elevated, inflation cycle. The Monetary Policy Committee (MPC) announced the decision in November 2025, highlighting signs of disinflation, rising reserves, and a steadier exchange rate as key considerations.
Speaking at a post-MPC briefing, CBN Governor Olayemi Cardoso emphasised that monetary stability is foundational for sustainable growth. “After stability comes investment, and after investment comes growth,” she said, underlining the central bank’s commitment to policy consistency and market confidence.
The committee also adjusted the asymmetric corridor around the MPR to +50/-450 basis points to manage short-term liquidity and curb inflation expectations. Other measures, including maintaining the liquidity ratio at 30 per cent and preserving cash reserve requirements, indicate a continued focus on sterilising excess liquidity without disrupting financial intermediation.
Economic Indicators and Rationale
While headline inflation eased to 16.05 per cent in October 2025, core and food inflation remain elevated, reflecting persistent cost pressures in urban centres. Nevertheless, improved food supply and tight monetary conditions contributed to moderating price growth.
Gross external reserves rose to $46.7 billion in mid-November, the highest in seven years, representing import cover of 10.3 months. Exchange rate stability improved, with the gap between official and parallel market rates narrowing to under 2 per cent, bolstering investor confidence. Governor Cardoso attributed this stability to reforms in the FX market, higher oil and non-oil exports, increased remittances, and a rules-based managed float regime.
Despite these gains, inflation risks remain, driven by global commodity price volatility, domestic supply shocks, geopolitical tensions, and rising domestic liquidity. Data from the NBS showed that Nigeria’s broad money supply (M3) rose to N119.04 trillion in October 2025, reflecting higher domestic credit conditions and government borrowing.
Shift to Orthodox Monetary Policy
The CBN is gradually moving away from unorthodox interventions. Cardoso confirmed the rollback of N2 trillion in intervention loans, leaving N4.69 trillion unrecovered, limiting further fiscal-style interventions. She stressed that predictable, transparent policy is now central to attracting private investment.
The bank is also focusing on bank recapitalisation, with sixteen banks meeting new capital thresholds, strengthening buffers for systemic stability. “Confidence doesn’t come without trust or respect. It comes from being transparent, open, honest, and consistent,” Cardoso said.
Market Reactions
Economic stakeholders offered mixed reactions. Olatunde Amolegbe, CEO of Arthur Stevens Asset Management, described the pause as cautious, noting expectations for a slight rate cut. Gabriel Idahosa, President of the Lagos Chamber of Commerce and Industry, said the decision aligns with current economic realities, while urging a future rate reduction.
Conversely, Eke Ubiji of the Nigerian Association of Small and Medium Enterprises argued that borrowing costs remain too high for SMEs despite moderating inflation. Similarly, Segun Ajayi-Kadir, Director-General of the Manufacturers Association of Nigeria, called for lower interest rates to stimulate production and investment in the real sector.
Outlook
The CBN reiterated its focus on inflation targeting, market-driven FX operations, and policy consistency, signalling that while rates remain steady for now, future adjustments will depend on the sustainability of disinflation, liquidity conditions, and broader macroeconomic stability.
