CBN Holds Interest Rate at 27% as Disinflation Advances and Economy Stabilises
The Central Bank of Nigeria has once again held the Monetary Policy Rate at 27 per cent, choosing caution as the economy gradually enters a disinflation phase. At its November 2025 meeting, the Monetary Policy Committee signalled its intention to prioritise stability even as early signs of cooling inflation, firmer external reserves, and a more stable exchange rate begin to emerge. Policymakers emphasised that the current stance allows earlier tightening measures to fully filter through the economy before any shift toward easing is considered.
Despite improvement in Nigeria’s inflation outlook, the CBN maintains that the battle is not yet won. Headline inflation slowed to 16.05 per cent in October, with food and core inflation also easing due to tightened liquidity and better food supply conditions. Speaking in Abuja, CBN Governor Olayemi Cardoso explained that the bank’s priority is sustaining market confidence. “After stability comes investment, and after investment comes growth,” he said, highlighting the need for consistency and transparency in monetary policy.
To strengthen liquidity management, the MPC adjusted the asymmetric corridor to +50/-450 basis points, while keeping other policy tools — including the liquidity ratio and cash reserve ratios — unchanged. These measures aim to curb excess liquidity without choking credit to the private sector. However, many Nigerians say the impact of disinflation has yet to be felt in daily living costs, especially in housing and transportation expenses that remain stubbornly high.
Nigeria’s external reserves have risen to $46.7bn, the highest in nearly seven years, supported by improved FX market transparency, stronger inflows, and the narrowing gap between official and parallel exchange rates. Yet risks remain. Rising money supply, global commodity uncertainties, and local food supply shocks could threaten the disinflation trend. Analysts note that broad money supply increased to N119.04tn in October — a sign that liquidity pressures persist despite tight monetary policies.
Reactions from economists and business groups have been mixed. Some, like Arthur Stevens Asset Management CEO Olatunde Amolegbe, describe the move as cautious but necessary given end-of-year spending that could trigger fresh price pressures. Others, including the Lagos Chamber of Commerce, hope for rate cuts soon, especially as inflation nears the CBN’s year-end target. Small business associations and manufacturers, however, warn that a 27 per cent benchmark rate continues to stifle borrowing, limit expansion, and weaken competitiveness in the real sector. They argue that while exchange-rate stability is welcome, Nigeria’s productive sectors urgently need cheaper credit to grow.
source: punch