CBN Holds Interest Rate at 27.5%, Analysts Cite Stabilization Amid Persistent Risks
The Central Bank of Nigeria (CBN) concluded its 300th Monetary Policy Committee (MPC) meeting by maintaining the benchmark interest rate at 27.5%, alongside other monetary parameters. This marked the second consecutive rate hold following six successive hikes over 20 months. Analysts widely viewed the decision as expected and reflective of cautious optimism toward stabilizing macroeconomic conditions in Nigeria.
Financial Derivatives Company (FDC) highlighted signs of macroeconomic stabilization, noting a recent easing in headline inflation to 23.71% and relative stability in the naira exchange rate. However, they urged caution due to global uncertainties and falling oil prices, recommending a wait-and-see approach to protect Nigeria’s monetary buffers. Similarly, Afrinvest West Africa supported the hold, pointing out improvements such as increased foreign reserves and exchange rate convergence but warned that downside risks still threaten gains.
Cowry Assets Management described the decision as a strategic pause to let the impact of previous rate hikes take effect. Yet, the firm raised concerns over high borrowing costs, which continue to restrict credit access for households and businesses, potentially hindering private sector growth. They also cautioned that inflation could surge again if fuel prices rise or currency instability worsens.
Cordros Research emphasized the MPC’s cautious stance amid economic uncertainties and suggested the committee will continue to monitor data closely before making further policy moves. Market reactions had already priced in the rate hold, with short-term yields expected to remain stable, supported by gradual inflation moderation and steady policy outlook.
Despite some positive signals, Afrinvest pointed to deeper structural challenges such as underperformance in oil production, security issues in the Niger Delta, fiscal indiscipline, and rising national debt. These factors, they argue, limit the effectiveness of monetary policy alone in achieving sustained economic stability and growth.
Source: Leadership