The Central Bank of Nigeria (CBN) has chosen to maintain its benchmark interest rate at 27.0%, signaling its commitment to securing recent progress in the fight against inflation. The decision came after the 303rd Monetary Policy Committee (MPC) meeting held on Tuesday.
Why the CBN Hit the Pause Button
CBN Governor Olayemi Cardoso explained that the committee opted for a pause to carefully monitor the effects of earlier policy actions. After months of aggressive rate hikes—and a surprise rate cut two months ago—the CBN now aims to stabilize momentum before making further moves.
Cardoso emphasized that the MPC wants to sustain the progress toward low and stable inflation, stressing that price stability remains its top priority.
Economic Data Shows Encouraging Trends
The committee’s confidence comes from recent improvement in key economic indicators:
- Inflation slowed for the seventh straight month, dropping from 18.02% in September to 16.05% in October 2025.
- The MPC credits the downward trend to:
- Earlier tightening measures
- Improved foreign exchange market stability
- Continued inflows of foreign capital
These gains motivated the committee to hold rates steady and allow the effects of earlier decisions to play out.
No Major Policy Changes — Except One
The MPC retained all major policy tools, including:
- Cash Reserve Ratio (CRR): 45%
- Liquidity Ratio (LR): 30%
However, it introduced a minor adjustment to the Asymmetric Corridor—a technical tool that influences how banks manage their excess reserves. This tweak is designed to encourage banks to lend more money to households and businesses instead of leaving funds idle at the CBN.
Caution Still Ahead
Despite positive trends, the MPC warned that inflation remains in double digits and far from ideal. The committee plans to stay vigilant and maintain a firm monetary stance until inflation drops closer to its long-term target.
Written by
Nduamaka Florence Emeka.
