The Central Bank of Nigeria (CBN) has for the third straight Monetary Policy Meeting (MPC) retained the benchmark interest rate at 27.50 percent.
The apex bank last adjusted the MPR in March 2025, raising it from 24.75 per cent to 27.5 per cent.
Rising from the July, 2025 Monetary Policy Committee (MPC), the CBN Governor Olayemi Cardoso announced that members voted unanimously to retain the MPR at 27.50 percent; retain the Cash Reserve Ratio (CRR) at 50 percent for Deposit Money Banks and 16 percent for Merchant Banks.
The Committee also retained the Liquidity Ratio (LR) at 30 percent and the Asymmetric Corridor at +500/-100 basis points around the MPR.
Economic experts say the CBN in its decision is striving to rein in on inflation, slow down spending, encourage saving, and keep the naira stable.
The Governor said the committee’s decision reflects the ongoing efforts to strike a balance between sustaining monetary tightening to combat inflation and ensure that interest rate stability does not stifle economic growth.
The MPC, he added, acknowledged recent government efforts to improve national security, particularly as it relates to food security.
The Monetary Policy Rate is the benchmark interest rate that guides lending rates in the financial system and serves as a primary tool in managing inflation.
CONSIDERATIONS
The Committee acknowledged the decline in headline inflation in June 2025, the third consecutive month of deceleration. This was largely driven by the moderation in energy prices and stability in the foreign exchange market. Despite these positive developments, Members observed the uptick in month-on-month headline inflation, suggesting the persistence of underlying price pressures. The continued global uncertainties associated with the tariff wars and geopolitical tensions could further
exacerbate supply chain disruption and exert pressure on the prices of imported
items.
Members also noted the continued stability in the banking system, evidenced by the stable Financial Soundness Indicators (FSIs) which would further be supported by the on-going banking recapitalisation exercise. The MPC noted that eight (8) banks have fully met the recapitalisation requirements, while others are making progress towards meeting the deadline. The Committee thus, urged the Management of the Bank to sustain its oversight of the banking system to ensure continued resilience, safety and soundness of the financial system.
Price and Other Domestic Developments Headline inflation (year-on-year) declined to 22.22 per cent in June 2025 from 22.97 per cent in May, primarily driven by the moderation in energy prices, especially cooking gas, wood charcoal and diesel. Food inflation (year-on-year), however, rose to 21.97 per cent in June 2025 from 21.14 per cent in May, attributed mainly to the
increase in the cost of processed food.
Core inflation, that is, all items less farm produce and energy, also increased to 22.76 per cent in June 2025 from 22.28 per cent in May, reflecting an uptick in the cost of Information & Communication, Housing & Utilities, and Personal Care & Social Services.
On a month-on-month basis, headline inflation rose to 1.68 per cent from 1.53 per cent, largely due to increases in the price of services and imported food.
The Committee acknowledged the efforts of the Federal Government in improving security and its impact on food production. Members thus urged the government to continue its support towards timely provision of high-yield seedlings, fertilizers, and other critical inputs for the current farming season. The MPC also noted the sustained stability in the foreign exchange market, accentuated by improved capital flows, earnings from increased crude oil production, rising non-oil exports and significant reduction in aggregate imports.
Real GDP in the first quarter of 2025 grew by 3.13 per cent compared with 2.27 and 3.38 per cent in the corresponding and preceding quarters of 2024, respectively. In addition, recent data on the Purchasing Managers Index indicates that the Nigerian economy remains on an expansionary path.
The external sector also remains stable and resilient despite persisting uncertainties in the global macroeconomic environment. Gross external reserves rose to US$40.11 billion on July 18, 2025,
representing about 9.5 months of import cover for goods.
Global Developments
Available projections suggest that global output recovery continues at a gradual pace.
However, recent developments, especially the persistent tariff war and geopolitical tensions, may continue to disrupt supply chains and exert upward pressure on the prices of imports.
Disinflation in the Advanced Economies has slowed, prompting major central banks to be cautious of upside risks to inflation. In the Emerging Markets, central banks continue to calibrate monetary policy to their domestic conditions, noting the persisting risks to inflationary pressures.
Outlook
Staff projections indicate a further decline in inflation in the coming months, underpinned by the current tight monetary policy stance, stable exchange rate, declining PMS prices, and moderation in food prices as the harvest season approaches. Given the persistent uncertainty in the policy environment and underlying price pressures, monetary policy will need to maintain its current stance until risks to inflation recede sufficiently. The Committee remains committed to the Bank’s price stability mandate and would take appropriate measures to foster stability and confidence in the economy.
