CBN Holds Interest Rate at 27.5% Amid Cautious Inflation

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The Central Bank of Nigeria (CBN) has kept its benchmark interest rate unchanged at 27.50% for the second consecutive meeting, signaling a cautious approach as policymakers assess inflation trends and economic stability.

The Monetary Policy Committee (MPC) unanimously voted to maintain the rate, citing improvements in exchange rate stability, slower fuel price increases, and a gradual easing of food inflation.

CBN Governor Olayemi Cardoso announced that the MPC member decided to retain the Cash Reserve Ratio (CRR) at 50 basis points for commercial bank and 16 percent for mortgage bank, the liquidity ratio (LR) at 30 percent, and the asymmetric corridor at +500/-100 basis points around the MPR; other monetary policy decisions were retained.

He justified MPC’s decision to pause the rate hike on the easing of Nigeria’s inflation rate to 23.7 percent in April.

Cardoso highlighted the government’s efforts to boost food supply and enhance security in farming communities as positive steps.

Since early 2024, the CBN aggressively raised rates to curb inflation and stabilize the naira.
The pause suggests the bank is evaluating the impact of those hikes. April’s inflation eased slightly to 23.71%, with food prices rising at a slower pace, while the naira has gained strength on improved investor confidence and FX inflows.

However, Cardoso acknowledged lingering pressures from high electricity costs, FX demand, and structural challenges, urging stronger fiscal measures to boost non-oil exports and foreign exchange earnings.