By Olatunbosun Obafemi
The Central Bank of Nigeria (CBN) has opted to maintain its benchmark interest rate at 27.5 percent, pausing its recent cycle of monetary tightening amid signs of easing inflation and improving macroeconomic conditions. The decision was announced by CBN Governor Olayemi Cardoso on Tuesday in Abuja, following the 300th meeting of the Monetary Policy Committee (MPC).
According to Cardoso, the unanimous decision to hold all key policy parameters steady reflects the committee’s desire to closely observe near-term economic trends and ensure policy choices continue to support long-term price stability. “The consideration is to enable a better understanding of near-term developments,” he said.
All major monetary policy tools were left unchanged: the Monetary Policy Rate (MPR) remains at 27.5 percent; the asymmetric corridor is retained at +500/-100 basis points; the Cash Reserve Ratio (CRR) stays at 50 percent for Deposit Money Banks and 16 percent for Merchant Banks; and the Liquidity Ratio is held at 30 percent.
The decision comes amid signs of relief on the inflation front. Headline inflation dropped to 23.71 percent in April from 24.23 percent in March. Monthly inflation saw a sharp drop from 3.9 percent to 1.86 percent. Food inflation fell slightly to 21.26 percent, while core inflation eased to 23.39 percent from 24.43 percent. These improvements, Cardoso explained, are driven by declining petrol prices, improved food supply, and government efforts to secure agricultural areas.
The CBN also announced a new strategy to strengthen foreign reserves, targeting a $1 billion monthly increase through enhanced diaspora remittances. This will be supported by the recently introduced Non-Resident Bank Verification Number (BVN) initiative. Cardoso emphasized that the CBN would play a supporting role, while banks and the private sector would lead the implementation.
On the foreign exchange front, the MPC noted growing stability, with a reduced gap between the official and parallel market exchange rates. However, the committee expressed concern over persistent inflationary pressures linked to high electricity costs, structural bottlenecks, and lingering forex demand.
In addition, the MPC flagged risks from falling global crude oil prices, citing increased supply from non-OPEC countries and international trade uncertainties. These, the committee warned, could pose fiscal risks for Nigeria. It urged the federal government to intensify efforts to boost foreign exchange earnings through oil, gas, and non-oil exports.
The CBN also reaffirmed the resilience of the banking sector, highlighting improved performance indicators and ongoing progress in the recapitalisation drive. Governor Cardoso assured that the apex bank would maintain rigorous oversight to ensure compliance with all regulatory and prudential standards.
With this policy pause, the MPC signals a cautious optimism, choosing to consolidate recent gains while remaining vigilant against emerging economic threats.
