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CBN retains interest rate at 27.5%

May 20, 2025
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The monetary policy committee (MPC) of the Central Bank of Nigeria (CBN) has retained the monetary policy rate (MPR) at 27.50 percent.

Olayemi Cardoso, the governor of the CBN, announced the MPC’s decision at a press conference on Tuesday after the panel’s 300th meeting in Abuja.

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The MPR, which benchmarks interest rates, was retained at 27.50 percent for the second time in 2025, after holding the rate in February.

Before holding the rate in February, the MPC had increased the interest rate 15 times since the committee started raising it in May 2022.

According to Cardoso, the MPC unanimously voted to hold the rate to enable the committee to comprehend the near-term developments.

He said the MPC also retained the cash reserve ratio (CRR) at 50 percent and liquidity ratio at 30 percent.

The CBN governor said the MPC noted the relative improvements in some key macroeconomic indicators expected to support the overall moderation in crisis in the near to medium term.

“These include the progressive narrowing of the gap between the Nigerian foreign exchange market, bureau de change (BDC) windows, the positive balance of payments position and the easy price of PMS,” Cardoso said.

“The members also noted with satisfaction the progressive moderation in food inflation and, therefore, commended the government for implementing measures to increase food supply, as well as stepping up the fight against insecurity, especially in farming communities.

“The committee thus encouraged security agencies to sustain the momentum while the government provides necessary inputs to farmers to further boost food production.”

However, Cardoso said the MPC recognised underlying inflationary pressures driven by high electricity prices, persistent foreign exchange (FX) demand, pressure and other legacy structure factors.

The CBN governor added that the MPC noted new policies introduced by the federal government to boost local production, reduce foreign currency demand pressures, and thus lessen the pass-through to domestic crisis.

“Given the relative stability observed in the foreign exchange market, members urged the bank to sustain the implementation of the ongoing reforms to further boost market confidence,” he said.

Speaking further, Cardoso asked the fiscal authority to boost efforts to enhance FX earnings from oil and non-oil exports, as the sectors are yielding significant returns.

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