CBN holds interest rate at 27.5% amid inflation moderation, exchange rate stability

The Central Bank of Nigeria (CBN) has decided to maintain the Monetary Policy Rate (MPR) at 27.5%, following the conclusion of its landmark 300th Monetary Policy Committee (MPC) meeting held in Abuja.

The decision, announced by CBN Governor Olayemi Cardoso during a post-meeting press briefing on Tuesday, reflects the apex bank’s cautious stance toward ongoing economic reforms.

All 12 members of the MPC voted unanimously to retain the key interest rate, underscoring a united front in navigating Nigeria’s complex economic environment.

Governor Cardoso explained that the decision was driven by the need to consolidate the gains from previous policy tightening, particularly in light of encouraging economic indicators.

“The MPC resolved to sustain its current stance as we continue to monitor the impact of earlier measures on inflation, exchange rate stability, and economic activity,” he said.

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Inflation Shows Signs of Cooling

A critical factor influencing the CBN’s decision is the recent moderation in Nigeria’s inflation rate. Data from the National Bureau of Statistics (NBS) shows headline inflation eased to 23.71% in April 2025, down from 24.23% in March.

Though inflation remains high, the downward trend is seen as an early sign that recent monetary tightening is beginning to take effect.

Analysts Support Rate Hold

Market analysts and economic stakeholders had largely anticipated the CBN’s decision to hold rates.

Olaitan S. Sunday, Managing Director of Rostrum Investment & Securities Ltd, remarked that the move was “in line with expectations.” According to him, “Holding the MPR at 27.5% will help support the naira, anchor inflation expectations, and boost investor confidence.”

Similarly, David Adonri, Vice Chairman of the Board at Highcap Securities, acknowledged the complexity of the situation, warning that deeper structural issues still loom.

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“The MPC’s caution is understandable, but going forward, the committee must remain alert. Demand-side pressures continue to outweigh supply, and that imbalance could reverse recent inflation gains if not addressed,” Adonri said.

Damilare Asimiyu, Head of Research at Afrinvest, echoed the sentiment, noting that certain improvements on the cost side could help inflation ease further.

“We anticipate a modest decline in May inflation, helped by the recent naira stability and a slight drop in pump prices by Dangote Refinery, from N835 to N825 per litre. This could reduce operating costs and improve household spending power,” Asimiyu said.

Exchange Rate Stability Offers Hope

Ahead of the MPC meeting, the naira appreciated marginally at the official foreign exchange market, trading at N1,597/$1 on Monday—an improvement from Friday’s rate of N1,599.01/$1.

This slight rebound is seen by market watchers as a positive signal, reflecting growing confidence in the CBN’s monetary management and stabilization efforts.

Focus on Policy Coordination and Long-Term Recovery

The MPC communiqué emphasized the importance of coordinated efforts between fiscal and monetary authorities to ensure sustainable economic growth and long-term price stability.

While maintaining the current rate allows existing policies time to take root, the committee hinted at the potential for adjustments in the second half of the year—should inflation continue to moderate and exchange rate conditions improve.

The next MPC meeting is scheduled for July 21–22, 2025. Until then, the CBN appears set to hold its course, balancing inflation control with the need to support Nigeria’s fragile economic recovery.