The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) has once again retained the Monetary Policy Rate (MPR) at 27.5%, marking the third consecutive hold in 2025. The decision, announced by CBN Governor Olayemi Cardoso after the MPC’s 301st meeting in Abuja, has sparked mixed reactions among financial experts and business stakeholders.
According to Cardoso, the decision is part of efforts to sustain the ongoing momentum in disinflation and curb emerging inflationary pressures. “We are beginning to see positive results from our monetary reforms. Inflation is moderating, the exchange rate is relatively stable, and investor confidence is improving. However, we will sustain this stance until inflation risks subside significantly,” he said.
The committee also maintained other key parameters:
Asymmetric corridor: +500/-100 basis points
Cash Reserve Ratio (CRR): 50% for deposit money banks, 16% for merchant banks
Liquidity ratio: 30%
Cardoso highlighted recent economic improvements, noting that Nigeria’s Gross Domestic Product (GDP) grew by 3.13% in Q1 2025, compared to 2.27% in the same period last year. He also disclosed that gross external reserves climbed to $40.11 billion as of July 18, offering 9.5 months of import cover.
The CBN governor also reassured Nigerians of the financial system’s stability, revealing that eight banks had already met the new recapitalisation requirements, while others were making steady progress.
Furthermore, the MPC expects inflation to moderate further in the coming months, supported by declining petrol prices, a stable naira, and seasonal drops in food prices.
Despite the optimism from the CBN, key players in the business community are alarmed by the persistently high interest rates.
The Lagos Chamber of Commerce and Industry (LCCI) warned that maintaining the rate at 27.5% continues to burden businesses already grappling with inflation and foreign exchange volatility.
“Interest rates at these levels are strangulating for businesses. The real sector is struggling, and we would have preferred a rate cut to ease access to credit,” said Dr Chinyere Almona, Director-General of LCCI.
Similarly, the Centre for the Promotion of Private Enterprise (CPPE) criticised the MPC for not considering the plight of manufacturers and small businesses. “Commercial lending rates now hover between 30% and 35%. At such rates, most small and medium-scale businesses are effectively excluded from accessing credit,” said Dr Muda Yusuf, Director of CPPE.
While some stakeholders expressed concerns, others applauded the CBN’s cautious approach.
The Nigeria Employers’ Consultative Association (NECA) praised the decision, arguing that a tight monetary stance is crucial to consolidating economic stability. NECA’s Director-General, Adewale-Smatt Oyerinde, stated, “Price stability must be achieved before we can think of aggressive rate cuts.”
Also, the Association of Small Business Owners of Nigeria (ASBON) acknowledged the need for stability but lamented that high borrowing costs make it difficult for small businesses to expand.
Economist Marcel Okeke, a former Chief Economist at Zenith Bank, strongly opposed the decision, calling it “injurious to the real economy.” He argued that excessive tightening is driving many businesses out of the financial system. “With MPR at 27.5%, no productive business can sustain borrowing at commercial rates of 30–35%,” he said.
On the other hand, renowned economist Prof. Akpan Ekpo described the decision as a “necessary evil,” explaining that relaxing monetary policy prematurely could worsen inflation.
The next MPC meeting is scheduled for September 22–23, 2025, and analysts expect intense debate over whether the rate should be cut to support growth or maintained to ensure price stability.
For now, businesses continue to hope for a policy shift that would unlock cheaper credit and stimulate real sector growth, while the CBN insists that long-term stability must take precedence over short-term relief.