CBN retains MPR at 27.5% to sustain disinflation amid global headwinds

The Central Bank of Nigeria (CBN) has kept the Monetary Policy Rate (MPR) unchanged at 27.5 per cent following its 301st Monetary Policy Committee (MPC) meeting held on July 21–22, 2025.

The decision, taken unanimously by all 12 MPC members, aims to consolidate recent gains in curbing inflation while safeguarding the economy from emerging domestic and global pressures.

In a communiqué issued after the meeting, the MPC also maintained the asymmetric corridor at +500/-100 basis points around the MPR. The Cash Reserve Ratio (CRR) for Deposit Money Banks was left at 50 per cent, while that for Merchant Banks remained at 16 per cent. The Liquidity Ratio was also retained at 30 per cent. The Committee said these measures were necessary to “sustain the momentum of disinflation and sufficiently contain price pressures.”

Inflation Trends and Economic Indicators
Headline inflation eased to 22.22 per cent in June 2025, down from 22.97 per cent in May, marking the third consecutive monthly decline. The CBN attributed this slowdown to moderating energy prices and relative stability in the foreign exchange market. However, food and core inflation recorded slight increases, reflecting persistent structural pressures. Month-on-month inflation also rose to 1.68 per cent from 1.53 per cent, driven by higher costs of services and imported food.

CBN Governor Olayemi Cardoso highlighted ongoing banking sector reforms, particularly recapitalisation efforts, as a key stabilising factor for the financial system. “Eight banks have already met the new capital requirements, while others are making tangible progress,” Cardoso noted. He reaffirmed the apex bank’s commitment to maintaining vigilant oversight to ensure financial stability.

The economy expanded by 3.13 per cent in Q1 2025, compared to 2.27 per cent in Q1 2024. External reserves climbed to $40.11 billion as of July 18, 2025, equivalent to 9.5 months of import cover, driven by higher oil production, growth in non-oil exports, and reduced import bills. “The outlook suggests that inflation could decline further, especially with the onset of the harvest season,” the communiqué stated.

Global Challenges and Outlook
Despite global economic uncertainties — including tariff disputes and geopolitical tensions disrupting supply chains — the MPC expressed optimism about Nigeria’s economic trajectory. “We are beginning to see the fruits of disciplined policy implementation, but we must stay the course to avoid slippage,” said a senior MPC member.

The Committee is scheduled to meet again on September 22–23, 2025, to reassess economic conditions and adjust its policy stance if necessary.