The Central Bank of Nigeria (CBN) maintained its key monetary policy instruments at the July 2025 Monetary Policy Committee (MPC) meeting, signaling a cautious approach to sustain disinflation while addressing global and domestic economic pressures. The Monetary Policy Rate (MPR) remained at 27.5%, with the asymmetric corridor at +500/-100 basis points, Cash Reserve Ratio at 50% for deposit money banks and 16% for merchant banks, and Liquidity Ratio at 30%. This marks the third consecutive hold since November 2024.
Despite a decline in headline inflation to 22.22% in June 2025 from 22.97% in May, according to the National Bureau of Statistics, month-on-month inflation rose to 1.68% from 1.53%, driven by persistent pressures in food (21.97%) and core inflation (22.76%). CBN Governor Olayemi Cardoso emphasized the need to anchor inflation expectations, stating, “Our goal is single-digit inflation. Current policies are reducing inflation, but we must remain vigilant.” Structural issues like food supply disruptions and rising logistics costs continue to fuel price volatility.
The CBN’s stance is shaped by global uncertainties, including geopolitical tensions in the Middle East and Eastern Europe, which disrupt supply chains and commodity prices. Tariff disputes among major economies further complicate Nigeria’s import-dependent market. However, the naira has stabilized, trading between N1,500 and N1,550/$ in the official market, bolstered by $4.1 billion in CBN forex interventions in H1 2025, improved oil production (1.6 million barrels per day), and increased diaspora remittances. Gross external reserves reached $40.11 billion by July 18, covering 9.5 months of imports.
Cardoso highlighted the permanence of forex reforms, including unified exchange rates and naira card use for international travel, to maintain market confidence. The ongoing bank recapitalization, with eight banks meeting new capital requirements, aims to strengthen financial resilience amid rising credit risks from high interest rates and inflation. Analysts warn that premature rate cuts could trigger capital outflows, threatening naira stability. The CBN’s steady policy approach reflects a commitment to balancing price stability with economic recovery in a volatile global landscape.
