CBN Holds Interest Rate Steady at 27.5% Amid Inflation Fight
Abuja, May 20, 2025 – The Central Bank of Nigeria (CBN) has decided to maintain its benchmark interest rate at 27.5 percent, keeping monetary policy tight as the nation continues its battle against inflation.
After its two-day Monetary Policy Committee (MPC) meeting in Abuja – the 300th such gathering since the committee’s creation – the CBN announced it would hold all key rates unchanged:
Monetary Policy Rate (MPR): 27.5% (unchanged)
Cash Reserve Ratio (CRR): 50% for commercial banks
Loading...Liquidity Ratio: 30%
Asymmetric Corridor: +500/-100 basis points around MPR
CBN Governor Olayemi Cardoso revealed the decisions during a live YouTube broadcast from the bank’s headquarters, noting that while inflation has shown signs of easing, monthly price increases remain concerning.
Inflation Shows Modest Improvement
Recent data from the National Bureau of Statistics (NBS) showed April inflation at 23.71%, down from 24.23% in March. Food inflation also declined slightly to 21.26% from 21.79% over the same period.
“The committee recognizes these positive trends but remains cautious,” Cardoso stated. “We’re seeing some stability returning to the foreign exchange market and some relief in fuel prices, but we cannot declare victory yet.”
Balancing Growth and Stability
The decision comes amid ongoing debates about the impact of high interest rates on Nigeria’s economic growth. While the tight policy has helped stabilize the naira and slow inflation, business leaders have complained about soaring borrowing costs, with lending rates reaching as high as 35.5%.
Governor Cardoso emphasized the need for continued coordination between monetary and fiscal policies to address structural issues driving inflation, particularly supply chain bottlenecks and energy costs.
What’s Next?
The MPC will reconvene in July to reassess economic conditions. Analysts suggest the bank may consider rate cuts later in the year if inflation continues its downward trend and the naira maintains its stability.
For now, Nigerians can expect borrowing costs to remain high as the central bank maintains its inflation-fighting stance. The CBN has encouraged commercial banks to improve cash availability at ATMs to ease liquidity pressures on businesses and consumers.
