CBN holds monetary policy rate at 27.5% amid economic adjustments
The Central Bank of Nigeria maintained the Monetary Policy Rate at 27.5%.
Governor Olayemi Cardoso highlighted unanimous support for the decision by the Monetary Policy Committee.
Key macroeconomic improvements were noted, including narrowing exchange rate gaps and food inflation moderation.
Following Tuesday's MPC's 300th meeting, CBN Governor Olayemi Cardoso revealed the decision at a press event in Abuja.
The CBN governor noted that the committee's decision was unanimous, highlighting the necessity of exercising caution as Nigeria negotiates continuous economic changes.
Before making any more changes, he said, the MPC thinks that keeping the interest rate at its current level will enable it to monitor and evaluate short-term economic trends.
The committee decided to keep the liquidity ratio at 30% and the cash reserve ratio (CRR) at 50%.
'MPC noted the relative improvements in some key macroeconomic indicators expected to support the overall moderation in crisis in the near to medium term,' Cardoso said.
'These include the progressive narrowing of the gap between the Nigerian foreign exchange market, bureau de change (BDC) windows, the positive balance of payments position, and the easy price of PMS.
The members also noted with satisfaction the progressive moderation in food inflation and, therefore, commended the government for implementing measures to increase food supply, as well as stepping up the fight against insecurity, especially in farming communities.
The committee thus encouraged security agencies to sustain the momentum while the government provides necessary inputs to farmers to further boost food production.'
However, according to the governor of the CBN, the committee recognized that there were underlying inflationary pressures, primarily caused by high electricity costs, ongoing need for foreign exchange, pressure, and other legacy structural elements, as seen on the Cable.
'The MPC noted new policies introduced by the federal government to boost local production, reduce foreign currency demand pressures, and thus lessen the pass-through to domestic crisis,' he said.
'Given the relative stability observed in the foreign exchange market, members urged the bank to sustain the implementation of the ongoing reforms to further boost market confidence,' he added.
This decision underscores the committee's commitment to managing inflationary pressures while maintaining economic stability.
The MPR is the principal instrument for regulating interest rates in the financial system, affecting loan costs, investment activity, and overall economic development.
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