TUE MAY 20 2025-theGBJournal| The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) adopted a cautious stance while voting to hold the Monetary Policy Rate (MPR) on today.
The Committee also voted to retain all other policy parameters in a bid to anchor inflation expectations and maintain the naira’s attractiveness.
The Committee voted to: retain the monetary policy rate (MPR) at 27.50%, retain the asymmetric corridor at +500bps/-100bps, retain the cash reserve ratio (CRR) for Deposit Money Banks at 50.0% and Merchant Banks at 16.0% and retain liquidity rate at 30.0%.
MPC’s decision was anchored particularly, on the elevated global uncertainty and its adverse implications for naira stability.
The MPC also weighed the implications of heightened global uncertainty and the persistence of elevated global interest rates, to justify the need to preserve interest rate differentials and limit capital outflows.
Nigeria joins other global economies tending towards rate hold such as the US Federal Reserve which held its benchmark interest rate steady at 4.25%–4.50% for the fourth consecutive meeting in May, citing balanced risks between elevated inflation and rising unemployment.
The Feds decision comes despite ongoing disinflation—(headline inflation eased by 10bps to 2.3% in April)—and a contraction in economic activity, with Q1-25 GDP declining by 0.3% quarter-on-quarter.
Similarly, in response to mounting downside risks to growth and a continued decline in inflation, both the Bank of England (BoE) and the European Central Bank (ECB) have moved to ease monetary policy.
The ECB reduced its main refinancing rate, deposit facility rate, and marginal lending facility by 25bps each in April, marking its third consecutive rate cut.
The BoE also lowered its policy rate by 25bps to 4.25% at its May meeting, following a two-meeting pause.
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