Asset management firm Meristem Securities has projected that the Central Bank of Nigeria (CBN) will likely maintain its Monetary Policy Rate (MPR) at 27.50% for much of 2025. This stance reflects a cautious approach as the bank assesses the impact of its previous rate hikes, which raised the MPR by 875 basis points in 2024 to tackle inflation. Experts at Meristem noted the potential for a less aggressive monetary policy, supported by expectations of modest inflation moderation while warning against premature easing that could reverse progress.
The CBN implemented several liquidity management measures in 2024, including raising the cash reserve ratio for banks and adjusting the asymmetric corridor around the MPR. These policies curbed excessive money supply growth and reduced private-sector credit, though credit to the government surged. The alignment of market rates with the elevated MPR attracted foreign investment, contributing to improved exchange rate stability. Despite these gains, challenges persist as high interest rates continue to weigh on businesses and households.
CBN Governor Yemi Cardoso acknowledged the toll of tight monetary policy during his remarks at the annual Bankers’ Dinner. While affirming the central bank’s commitment to price stability, he expressed optimism about a potential downward trend in inflation in 2025. Cardoso emphasized that as inflation data improves, the CBN could consider adjusting rates, with a dovish shift possible by the year’s final quarter.