Nigeria’s Monetary Policy Committee (MPC) has elected to hold the benchmark interest rate at 27.50%, a move welcomed by analysts as a strategic support for foreign exchange stability and continued inflation decline.
In its July 21–22 meeting, held in Abuja, the Monetary Policy Committee maintained its policy settings:
MPR at 27.50%
Liquidity ratio unchanged at 30%
Cash Reserve Ratios held at 50% (banks) and 16% (merchant banks)
These decisions reflect the committee’s resolve to sustain the disinflationary trend and shield against emergent price pressures.
As Governor Olayemi Cardoso noted in the MPC communique:
“Maintaining the current policy stance will continue to address existing and emerging inflationary pressure.”
Nigeria’s headline inflation rate eased to 22.22% in June 2025, down from 22.97% in May, marking a third consecutive month of decline . This reflects a significant year-on-year drop from 34.19% in June 2024 .
Still, month-on-month inflation ticked up slightly to 1.68% in June, indicating that underlying pressures in food and core categories persist .
The Naira strengthened marginally, with the official FX rate improving by about 0.15% to ₦1,534.72/USD .
Open Buy Back and overnight rates also declined sharply, reflecting improved liquidity in the banking system.
External reserves rebounded to $40.11 billion as of July 2025, offering approximately 9.5 months of import cover, the highest level since late 2024 .
Still, reserves recorded a drop earlier in H1 2025—from $40.88 billion at end‑2024 to about $37.37 billion by June—due to FX commitments and global pressures .
Financial institutions like Afrinvest and Mesristem Securities interpreted the MPC’s stance as supportive of macroeconomic stability. They expect increased investor activity in equities and fixed income markets against a predictable monetary backdrop .
Cordros Securities analysts also highlighted robust foreign portfolio investments, with net inflows reaching $2.73 billion in June, up 315% from April, reinforcing confidence in naira liquidity .
GDP growth rose to 3.13% in Q1 2025, up from 2.27% in Q1 2024, as reported by the NBS
Nigeria recorded a balance-of-payments surplus of $6.83 billion in 2024, reversing a multi-year deficit trend
The CBN Composite PMI averaged 52.2 points in Q2, indicating expansion in agriculture, industry, and services sectors
Governor Cardoso emphasised the need for ongoing tight monetary policy until inflation reaches single digits, citing lingering food price pressures and global volatility .
Despite improvements, policymakers recognise that high real interest rates still burden businesses and households, requiring better policy coordination and communication .
CBN is also boosting diaspora remittances, licensing new payment operators, and encouraging non-oil export growth to secure sustainable foreign exchange inflows.
What This Means for Nigeria:
Inflation Continued gradual decline, but persistent core pressures
FX Market Stabilising naira, narrowing official vs parallel gap
Reserves Rebuilding buffers, though earlier drawdowns linger
Investor Sentiment Renewed confidence fuelled by capital inflows and policy predictability