The Central Bank of Nigeria (CBN) on Tuesday resolved to leave the monetary policy parameters, including the Monetary Policy Rate (MPR), the benchmark interest rate, unchanged at current levels.
Monetary Policy Committee (MPC) of the apex bank unanimously voted to hold policy, retaining the MPR, the rate at which commercial banks borrow from the central bank, at 27.50 per cent.
The committee also retained the asymmetric corridor around the MPR at +500/-100 basis points, Cash Reserve Ratio of Deposit Money Banks at 50 per cent and Merchant Banks at 16 per cent, and left the Liquidity Ratio unchanged at 30 per cent.
Addressing journalists after the 300th meeting of the MPC in Abuja, Governor of CBN, Mr. Olayemi Cardoso, acknowledged the relative improvements in some key macroeconomic indicators, which were expected to support the overall moderation in prices in the near to medium term.
Cardoso identified specific areas of improvement to include the progressive narrowing of the gap between the Nigeria Foreign Exchange Market (NFEM) and Bureau De Change (BDC) windows, the positive balance of payments position, and easing price of premium motor spirit (PMS).
Cardoso, who read the committee’s communique, said MPC was satisfied with the progressive moderation in food inflation. He commended the government for implementing measures to increase food supply and stepping up the fight against insecurity, especially in farming communities.
The committee encouraged the security agencies to sustain the momentum, while government provided necessary inputs to farmers to further boost food production.
The CBN governor, quoting the National Bureau of Statistics (NBS), said headline inflation (year-on-year) declined to 23.71 per cent in April 2025, compared with 24.23 per cent in March 2025.
On a month-on-month basis, it also declined to 1.86 per cent in April 2025, from 3.9 per cent in the previous month, he said.
He pointed out that both food and core components contributed to the decline in inflation in the period.
While food inflation eased further to 21.26 per cent in April 2025, from 21.79 per cent in the previous period, the core index also declined to 23.39 per cent in April 2025, compared with 24.43 per cent in March.
Nonetheless, Cardoso acknowledged underlying inflationary pressures driven largely by high electricity prices, persistent foreign exchange demand pressure and other legacy structural factors.
He said new policies were being introduced by the federal government to boost local production, reduce foreign currency demand pressure, and lessen the pass-through to domestic prices.
Cardoso said given the relative stability observed in the FX market, the committee urged the CBN to sustain the implementation of ongoing reforms to further boost market confidence.
MPC also called on the fiscal authority to strengthen current efforts at enhancing foreign exchange earnings, especially from gas, oil and non-oil exports.
The committee, however, expressed concerns about the recent decline in crude oil prices, attributable to increased production by non-OPEC members as well as uncertainties associated with U.S. trade policy, which presented new challenges for fiscal receipts and budget implementation.
The committee reaffirmed the continued stability of the banking system following notable improvements in key performance indicators and observed the appreciable progress in the ongoing recapitalisation exercise.
The committee further urged the CBN to sustain its effective oversight of the industry to ensure compliance with regulatory and macro-prudential guidelines.
Cardoso pointed out that it was based on the strength of those considerations, and driven by the continued uncertain policy environment, exacerbated by ongoing global shocks, that MPC weighed the available policy options.
He said members were unanimous in their decision to hold policy to enable a better understanding of near-term developments.
MPC also reaffirmed its commitment to prioritise policies targeted at anchoring inflation expectations and easing exchange rate pressure.
The apex bank’s boss also disclosed that gross external reserves increased by 2.85 per cent to $38.90 billion as at 16th May 16, 2025, from $37.82 billion at the end of March. He said this represented an import cover of 7.6 months for goods and services, while 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.
Cardoso said although global output growth was expected to remain positive, despite existing and emerging headwinds, the International Monetary Fund (IMF) downgraded its global growth forecast to 2.8 per cent in 2025 and 3.0 per cent in 2026, compared with 3.3 per cent in 2024 due to the uncertain policy environment.
MPC members were unanimous in their resolution to maintain close surveillance of developments in both the domestic and global environments to enable appropriate policy response to emerging shocks, the CBN governor added.
Addressing concerns that despite approvals from ratings agencies in recent times, Nigerians were yet to feel the impact of improvements in the macro economy, Cardoso assured that the reform initiatives that had been widely celebrated will “begin to yield greater results as time goes on”.
He stated, “Let me make the comment that the Fitch upgrade is particularly important because it was coming at a time when there were global economic headwinds and shocks, and there was a lot of uncertainty.
“So, it’s important for us to realise that in spite of all that, there was a move by Fitch to upgrade, and I think that is a very positive signal.
“Now, in terms of how these whole macroeconomic fundamentals are playing out in spite of the fact that there have been positive endorsements from all kinds of bodies that make it a point of duty to observe and critique the moves that various countries are making to ensure they have stability in their economies.”
He added, “I think it’s important to say that investors and let’s face it, without investments, economies don’t grow.
“Investors don’t go to where there’s instability. So, i think that is the first thing to understand on the journey, and this is a journey.
“Investors don’t go out to invest to lose money. They go out to invest because an economy is stable, and they can plan. With that stability comes confidence, with confidence comes investment, and with investment comes growth and outputs.
“I think that’s the trajectory that you will find in all countries of the world. We obviously have been through a long period of instability.
“And I think that clearly what is being recognised is that the Nigerian economy is now stable, and there’s interest in those who want to invest to now invest.”
Cardoso said, “Clearly, the inflation numbers, they speak for themselves. The overall trajectory is in the right direction. Not one particular aspect of managing the economy is a bullet that will solve all the problems.
“It’s a multiplicity of different endeavours, and that is why the combination of the efforts that are being made and are yielding results in terms of stability—and don’t forget, the central bank is the custodian of stability in an economy.
“If you look at the exchange rate, for example, volatility has reduced from over four per cent a year ago to less than half of one per cent around now.
“So, that’s an indication of stability, and with the increasing collaboration between the fiscal and the monetary side the journey that we are going through will begin to yield greater results as time goes on I have no doubt about that.”
The CBN governor also addressed Naira’s depreciation amid global economic uncertainties in recent times.
Cardoso said a lot of the measures taken by CBN to stabilise the economy helped to moderate depreciation of the local currency, adding that devaluation has been modest compared to other countries during the period of global uncertainty.
He said, “I dare say that if those actions had not been taken when they were, the results would have been a lot more disastrous. So, it’s a good thing that we started these reforms early and that we stayed the course to the point where we built buffers that are able to withstand shocks that come in.
And that dovetails into your issue of reserves.
“If you look at and make the comparison between Nigeria during the last month or two when the whole issue of global tensions got heightened. Let’s face it—right now, we’re in a period of heightened uncertainty.
“And if you are all observing, you’ll find that the various currencies of the world were under attack and were having to defend themselves.
“You’ll find that relative to other countries, Nigeria came out very well engaged. We were able to ensure that our depreciation was very modest and that the stability was pretty much there.”
James Emejo and Nume Ekeghe
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