Central Bank of Nigeria maintains interest rate for the third consecutive time
Nigeria's Central Bank Maintains Interest Rate at 27.50% Amid Persistent Inflation
The Central Bank of Nigeria (CBN) has maintained its interest rate at 27.50% during its third Monetary Policy Committee (MPC) meeting of 2025. This decision was made to sustain the momentum of moderation in inflation, which stood at 22.22% in July, and to help contain price pressures and stabilize the economy amid ongoing inflationary and currency challenges.
The MPC, led by Governor Olayemi Cardoso, assessed that holding the rate steady would be the most effective approach in the current economic environment. The tight monetary policy framework, including unchanged Cash Reserve Ratio (CRR) and liquidity ratios, reflects the CBN’s cautious approach to balancing economic growth with inflation control and naira stabilization.
The decision not to change borrowing costs was in line with expectations for most observers. The committee decided to maintain the current policy stance and hold all policy parameters during a meeting that took place in Abuja, Nigeria's capital city.
Regarding prospects for future rate changes, the MPC’s current stance signals a continued priority on price stability and inflation containment. Although some analysts and stakeholders had expected a modest rate cut based on global inflation trends potentially easing Nigerian inflation, the CBN opted to maintain rates given persistent inflation and economic uncertainties. This suggests that any future rate reductions will likely depend on more definitive evidence of sustained lower inflation and improved currency stability.
The consumer-price index in Nigeria was revamped in January, and the decision by the Central Bank of Nigeria to maintain the current policy stance was made to address inflationary pressures. The hold at 27.50% was the expected outcome for most observers. Maintaining the current policy stance will continue to address existing and emerging inflationary pressure.
A survey of economists predicted that Olayemi Cardoso would take a dovish stance following the cooldown of inflationary pressures. However, the Central Bank Governor did not attempt a hawkish stance at the meeting. Analysts at the financial services group Norrenberger wrote that a small measured cut in interest rates cannot be ruled out.
The MPC's decision to maintain the interest rate comes as a relief to many, as it indicates a more stable economic outlook for Nigeria. The committee's focus on price stability over short-term growth accommodation is a positive sign for the country's long-term economic health.
[1] Central Bank of Nigeria (CBN) Press Release, 2025. [2] Norrenberger Financial Services Group Report, 2025. [3] Manufacturers Association of Nigeria (MAN) Statement, 2025. [4] Bismark Rewane Speech, 2025.
- The Central Bank of Nigeria's decision to maintain the interest rate at 27.50% was a strategic move to help stabilize the economy, as the bank focuses on inflation control and naira stabilization, which is a critical aspect of business and finance in Nigeria.
- The MPC's continued priority on price stability and inflation containment suggests that the bank's monetary policy will significantly impact business and finance operations in Nigeria, with the possibility of future rate reductions only coming with more definitive evidence of sustained lower inflation and improved currency stability.
