The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) at its meeting on July 21 and 22, 2025 to decided to maintain the current monetary policy stance and hold all
policy parameters constant.
It, therefore, retained the Monetary Policy Rate (MPR) at 27.50 per cent, maintained the asymmetric corridor around the MPR at +500/-100 basis points and retained the Cash Reserve Ratio (CRR) for Deposit Money Banks at 50.00 per cent and for Merchant Banks at 16.00 per cent.
The MPC, which was led by the governor of CBN,vMr. Olayemi Cardoso, also kept the Liquidity Ratio unchanged at 30.00 per cent.
This decision was premised on the need to sustain the momentum of disinflation and sufficiently contain price pressures.
It said that “maintaining the current policy stance will continue to address the existing and emerging inflationary pressure.
“The MPC will
continue to undertake rigorous assessment of economic conditions, price development and outlook to inform future policy decisions.
The committee acknowledged the decline in headline inflation in June 2025, the third
consecutive month of deceleration. This was largely driven by the moderation in
energy prices and stability in the foreign exchange market.
Despite these positive
developments, Members observed the uptick in month-on-month headline inflation,
suggesting the persistence of underlying price pressures.
It said that the continued global uncertainties associated with the tariff wars and geopolitical tensions could further
exacerbate supply chain disruption and exert pressure on the prices of imported
items.
Members also noted the continued stability in the banking system, evidenced by the stable Financial Soundness Indicators (FSIs) which would further be supported by the
on-going banking recapitalisation exercise. The MPC noted that eight banks have
fully met the recapitalisation requirements, while others are making progress towards
meeting the deadline.
The committee, therefore, urged the management of the bank to sustain its oversight of the banking system to ensure continued resilience, safety and
soundness of the financial system.
The MPC said that the headline inflation (year-on-year) declined to 22.22 per cent in June 2025 from 22.97
per cent in May, primarily driven by the moderation in energy prices, especially
cooking gas, wood charcoal and diesel.
Food inflation (year-on-year), however, rose to 21.97 per cent in June 2025 from 21.14 per cent in May, attributed mainly to the
increase in the cost of processed food.
Core inflation, that is, all items less farm
produce and energy, also increased to 22.76 per cent in June 2025 from 22.28 per cent in May, reflecting an uptick in the cost of Information & Communication, Housing
& Utilities, and Personal Care & Social Services.
On a month-on-month basis, headline inflation rose to 1.68 per cent from 1.53 per
cent, largely due to increases in the price of services and imported food.
The Committee also acknowledged the efforts of the federal government in improving
security and its impact on food production. Members thus urged the government to continue its support towards timely provision of high-yield seedlings, fertilizers, and
other critical inputs for the current farming season. The MPC also noted the sustained
stability in the foreign exchange market, accentuated by improved capital flows,
earnings from increased crude oil production, rising non-oil exports and significant
reduction in aggregate imports.
Real GDP in the first quarter of 2025 grew by 3.13 per cent compared with 2.27 and
3.38 per cent in the corresponding and preceding quarters of 2024, respectively. In
addition, recent data on the Purchasing Managers Index indicates that the Nigerian
economy remains on an expansionary path.
The external sector also remains stable
and resilient despite persisting uncertainties in the global macroeconomic
environment.
It also said that gross external reserves rose to US$40.11 billion on July 18, 2025,
representing about 9.5 months of import cover for goods.
Global Developments
Available projections suggest that global output recovery continues at a gradual pace.
The MPC said that projections indicate a further decline in inflation in the coming months,
underpinned by the current tight monetary policy stance, stable exchange rate,
declining PMS prices, and moderation in food prices as the harvest season
approaches.
“Given the persistent uncertainty in the policy environment and underlying price pressures, monetary policy will need to maintain its current stance until risks to inflation recede sufficiently.
“The Committee remains committed to the Bank’s price
stability mandate and would take appropriate measures to foster stability and
confidence in the economy.”
