In a decisive move, the Central Bank of Nigeria (CBN) yesterday announced the retention of the Monetary Policy Rate (MPR) at 27.5 percent. The decision, revealed by CBN Governor Mr. Olayemi Cardoso at the conclusion of the 300th Monetary Policy Committee (MPC) meeting held at the bank’s headquarters in Abuja, was influenced by ongoing global trade tensions and economic uncertainties.
“The Committee was unanimous in its decision to hold policy, and thus decided as follows: Retain the MPR at 27.50%; Retain the asymmetric corridor around the MPR at plus 500 to minus 100 basis points; Retain the Cash Reserve Ratio of deposit money banks at 50% and that of merchant banks at 16%; and Retain the liquidity ratio at 30%,” Mr. Cardoso stated.
Reasons Behind the Decision
Governor Cardoso noted that the MPC’s decision was guided by improvements in critical economic indicators. Key factors included the narrowing gap between the official foreign exchange market and the Bureau de Change (BDC) windows, a positive net position of Nigeria’s foreign reserves, and easing fuel prices.
“The MPC noted the relative improvements in some key macroeconomic indicators, which are expected to support the overall moderation in prices in the near to medium term,” he explained.
These improvements, coupled with a positive balance of payments position and reduced price pressures on petroleum motor spirit (PMS), contributed to the committee’s confidence in maintaining the current monetary policy stance.
Nevertheless, the governor emphasised ongoing challenges including inflationary pressures driven by high electricity costs, persistent demand pressures in the foreign exchange market, and other “legacy structural factors” still influencing the economy.
Inflation and Food Supply
The CBN Governor highlighted progress in moderating food inflation, attributing gains to government initiatives aimed at boosting food supply and intensified efforts to combat insecurity in farming regions. He urged security agencies to sustain this momentum while calling on the government to continue providing essential inputs to farmers to enhance agricultural productivity.
Call for Increased Foreign Exchange Earnings
Mr. Cardoso further appealed to fiscal authorities to intensify efforts to boost foreign exchange earnings, especially through gas, oil, and non-oil exports. Encouraging refineries such as the Dangote Refinery to increase production and supply petroleum products across the sub-region was also underscored as a critical strategy.
Concerns Over Declining Oil Prices
The governor expressed concern over the recent decline in international crude oil prices, citing increased production by non-OPEC countries and uncertainties related to U.S. trade policies as contributing factors. He warned that sustained low oil prices could negatively impact Nigeria’s 2025 federal budget implementation.
“The MPC, 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 present new challenges for fiscal receipts and budget implementation,” he said.
