By Musa Ibrahim
The Central Bank of Nigeria (CBN) has maintained its key Monetary Policy Rate at 27 percent, following the conclusion of the Monetary Policy Committee (MPC) meeting last Tuesday.
Mr. Olayemi Cardoso, Governor of CBN, said that the decision reflects a cautious approach to consolidate gains in taming inflation and stabilising the financial system.
All 12 committee members attended the session, with the majority voting to keep the MPR unchanged while adjusting the standing facility corridor around it to +50/-450 basis points. Other key policy parameters were also maintained. These include the cash reserve requirement for deposit money banks at 45 percent, 16 percent for merchant banks, and 75 percent for non-TSA public sector deposits. The liquidity ratio remains at 30 percent.
Mr. Cardoso highlighted that the MPC’s stance is guided by the need to sustain progress toward low and stable inflation. He noted that October 2025 marked the seventh consecutive month of slowing inflation, supported by factors such as a stable exchange rate, increased capital inflows, surplus current account balance, stable petrol prices, and improved food supply.
“Headline inflation remains in double digits, which calls for continued vigilance,” Mr. Cardoso said. “The decline in headline, core, and food inflation suggests that the effects of our past policies will continue to support the economy.”
The governor said that holding policy parameters steady allows previous rate hikes to transmit effectively to the real economy. “Amid lingering global uncertainties, maintaining the current stance will help reduce prices further,” he explained.
On the external sector, Mr. Cardoso noted robust performance, pointing to Nigeria’s $46.7 billion reserves and surplus current account. He linked this to higher non-oil exports, improved oil production, rising remittances, and increasing portfolio investments. “Reserves are being built in a systemic and sustainable way. Portfolio investors are returning because reforms have made Nigeria more attractive,” he said.
Mr. Cardoso also reflected on broader economic recovery. “Macro indicators are improving. Inflation has come down steadily from over 34 per cent last year to around 16 percent today. Stability has returned, and with stability comes investment, which drives growth.”
He defended the CBN’s move away from direct interventionist lending, noting that past programmes created fiscal and financial risks. “Excessive interventions discouraged commercial banks from innovating and created a moral hazard. Our new approach supports development finance responsibly and sustainably,” he said.
The governor also highlighted Nigeria’s recent removal from the FATF grey list as a milestone, emphasizing the importance of sustaining reforms. “Exiting the grey list improves global perception of Nigerian banks and encourages correspondent banks to engage more freely.”
On foreign exchange, Mr. Cardoso stressed that gains were market-driven. “We now operate a system of willing buyers and willing sellers. Transparency and consistency have restored confidence. Daily turnover averages $500 million, often without CBN participation.”
Looking ahead, the MPC expects continued moderation in inflation, driven by prior policy tightening, foreign-exchange stability, and increased food supply from harvests. “We remain committed to an evidence-based policy approach to achieve price and financial system stability,” Cardoso said.
Dr. Samson Galadima Simon, Chief Economist at ARKK Economics, welcomed the cautious approach but warned that challenges remain. “Food inflation has slowed dramatically, but core inflation, which is the CBN’s main remit, is declining more slowly. Headline inflation at 16 percent is still twice the local target. Holding rates is the right call,” he said.
The MPC’s decision signals a continued focus on measured, data-driven policy as Nigeria navigates the delicate balance between growth and price stability.
