The Central Bank of Nigeria has decided to leave the country’s interest rate unchanged at 27.5 per cent.
The announcement was made on Tuesday, May 20, 2025, by the CBN Governor, Olayemi Cardoso, at the end of a two-day Monetary Policy Committee meeting held in Abuja.
This is the second time in a row that the CBN has held the rate steady after a series of increases in the last few years. The interest rate, officially called the Monetary Policy Rate, is the rate at which the CBN lends money to commercial banks and is used to manage inflation and economic growth.
Governor Cardoso explained that the decision was based on signs of improvement in Nigeria’s economy.
“The MPC noted the relative improvements in some key macroeconomic indicators which are expected to support the overall moderation in prices in the near to medium term,” he said.
He added that members were pleased with the slight drop in food inflation and praised the government’s efforts to increase food supply and secure farming areas.
“The committee commended the government for implementing measures to increase food supply as well as stepping up the fight against insecurity, especially in farming communities,” Cardoso said.
He also encouraged security agencies to continue their work and asked the government to provide more support to farmers.
Aside from the interest rate, the committee also kept other important financial tools unchanged. These include:
* The Cash Reserve Ratio for commercial banks at 50 per cent
* The CRR for merchant banks at 16 per cent
* The liquidity ratio at 30 per cent
* The asymmetric corridor around the MPR at +500/-100 basis points
Cardoso also noted some positive economic developments. These include a narrowing gap in the exchange rate between official and black market windows, an improved balance of payments, and falling petrol prices.
However, he admitted that inflation remains a problem, driven by factors like high electricity costs, pressure on the naira, and deeper structural issues in the economy.
He said, “The MPC acknowledged underlying inflationary pressures driven largely by high electricity prices, persistent foreign exchange demand pressure and other legacy structural factors.”
He also mentioned that new government policies aimed at increasing local production and reducing pressure on foreign exchange demand were welcomed steps.
The decision comes as Nigerians continue to face rising living costs, but the CBN says it is hopeful that current efforts will bring some relief in the coming months.
