CBN Retains Interest Rate at 27% Amid Push for Economic Recovery

The Central Bank of Nigeria (CBN) has opted to maintain the monetary policy rate (MPR) at 27%, signalling its cautious approach to sustaining inflation control and stabilising the foreign exchange market. The announcement was made by CBN Governor Olayemi Cardoso during Tuesday’s 303rd Monetary Policy Committee (MPC) meeting.

The decision follows a prior adjustment in September, when the CBN cut the MPR from 27.5% to 27%, marking the first reduction since the post-COVID era.

Rationale Behind Retaining the Rate

Governor Cardoso explained that the MPC believes economic conditions are not yet stable enough to justify another rate reduction.

“The Committee decided by a majority vote to maintain the monetary policy stance,” he said.

The MPR serves as the baseline interest rate in Nigeria, influencing other lending and borrowing rates across the economy. By keeping it at 27%, the CBN aims to sustain its tight monetary policy designed to curb inflation and restore investor confidence.

Despite a steady decline in inflation, the committee preferred caution, emphasising that a lower rate could be premature given current economic conditions.

Inflation and Monetary Adjustments

The latest figures show continued improvement in inflation:

• October 2025: 16.05%
• September 2025: 18.02%
• August 2025: 20.12%

In addition to holding the MPR, the CBN adjusted the corridor around the rate to +50/-450%, up from +250/-250% in September. Other key tools were maintained:

• Cash Reserve Ratio (CRR): 45% for Deposit Money Banks, 16% for Merchant Banks
• Liquidity Ratio: 30%

These measures highlight the bank’s measured and flexible approach to navigating Nigeria’s economic recovery.

Implications for Businesses and the Economy

Retaining the interest rate at 27% offers a dual impact:

• Positive for businesses: High rates help maintain purchasing power and encourage savings.
• Cautionary signal: The decision reflects the unpredictable nature of economic policy amid fluctuating inflation and global economic pressures.

The MPC’s strategy underlines the CBN’s commitment to balancing economic growth with financial stability, ensuring that monetary interventions remain aligned with the broader goal of sustainable recovery.

The CBN’s decision to hold the interest rate steady at 27% reinforces its careful, data-driven approach to inflation management, forex stability, and support for Nigeria’s ongoing economic recovery.