CBN Retains Benchmark Interest Rate (MPR) at 27%
CBN Retains MPR at 27%: Key Rates & Policy Stance Confirmed
The Central Bank of Nigeria (CBN), through its Monetary Policy Committee (MPC), has elected to maintain the Monetary Policy Rate (MPR) at 27%. Announced by Governor Olayemi Cardoso following the Committee’s 303rd meeting on Tuesday in Abuja, the decision reflects a sustained commitment to a tight monetary policy aimed at securing price stability. The MPR, which functions as Nigeria’s benchmark interest rate, underpins lending and borrowing costs across the economy. According to Governor Cardoso, the continued hold reflects the Committee’s focus on achieving low and stable inflation despite recent deceleration in the headline inflation rate.
Key Policy Rates Held Unchanged
To reinforce the tight policy stance and manage liquidity, the MPC unanimously retained all other key ratios, signaling an intention to allow previous rate hikes to take full effect before making further adjustments.
The key policy measures retained were:
Cash Reserve Ratio (CRR): Maintained at 45% for commercial banks, with the specific ratios for merchant banks (16 per cent) and non-TSA public sector deposits (75 per cent) also held constant.
Liquidity Ratio (LR): Retained at 30%
Standing Facilities Corridor: Adjusted to $+50 / -450$ basis points around the MPR.
Governor Cardoso stated that the continued hold on these ratios is intended to absorb excess liquidity and ensure stability within the financial system.
Justification and Economic Outlook
The MPC’s decision was supported by evidence of continued deceleration in headline inflation. The Committee credited this easing to the sustained monetary tightening implemented in previous meetings, alongside a stable exchange rate and stability in Premium Motor Spirit (PMS) pricing.
Despite these positive developments, the MPC emphasised that inflation remains elevated and requires coordinated, ongoing policy interventions to bring it down to target levels. The Committee reaffirmed its commitment to evidence-based monetary policy.
The meeting also acknowledged progress in the bank recapitalisation drive, confirming that 16 banks have now met regulatory requirements, strengthening the overall resilience of the financial system. On the global front, the Governor noted that while a medium-term recovery is anticipated, global inflation is projected to remain above pre-pandemic levels in the near term.
Conclusion
The CBN’s decision to maintain the MPR at 27% signals that the Central Bank views the current policy environment as restrictive enough to tackle inflation without further immediate rate shocks. The move places emphasis on the efficacy of existing tightening measures and underscores the priority placed on price stability and the ongoing stability of the Nigerian financial system.
