27.5% Monetary policy rate adjustable – CBN

By Tunde Opalana

The Central Bank of Nigeria’s (CBN) has raised the hope that the 27.5% Monetary Policy Rate (MPR) recently declared is adjustable.

Though the CBN Monetary Policy Committee (MPC) insisted it will hold all key rates steady as it monitors inflation and exchange rate dynamics.

The MPC has signaled that it will “remain data-dependent and continue to assess economic conditions before adjusting rates.”

The Governor of the apex bank,Yemi Cardoso, at the post-MPC press briefing in Abuja on Thursday said the committee will continues to evaluate macroeconomic conditions before making any adjustments.

He said while inflation is showing early signs of slowing, the committee remains cautious about external shocks, food supply constraints, and exchange rate movements.

The Governor added that interest rates for now remain elevated, but stability remains the focus.

This is a stance that aligns with broader trends in Sub-Saharan Africa, where central banks are treading carefully to avoid policy missteps.

The decision to hold rates comes at a time when interest rates on treasury bills have trended downwards to 19%, with short-term and long-term yields converging, resulting in a flat yield curve.

Cardoso emphasized that while the exchange rate has begun to appreciate due to recent monetary interventions, the committee remains cautious about inflationary risks, particularly food inflation.

This signals expectations that monetary conditions may remain tight in the short run.

The communique issued at the end of the MPC meeting indicated that the decision to maintain rates was driven by “recent macroeconomic indicators that suggest improved market stability”.

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The Committee noted that core inflation remains a concern, even as recent data indicates a slowing trajectory. Food prices continue to exert upward pressure, and thus, premature monetary easing could reverse recent gains,” the communique stated.

The MPC also acknowledged the impact of the rebased Consumer Price Index (CPI) by the National Bureau of Statistics (NBS), which adjusted item weights to reflect current consumption patterns.

The communique highlighted that “improved security measures in agricultural regions, coupled with policy actions to enhance food supply, should support the continued moderation of inflation in the coming months.”

Additionally, the committee expressed confidence that CBN-led foreign exchange market reforms, including the introduction of the B-Match system and Nigeria Foreign Exchange Code, would enhance market stability, transparency, and investor confidence.

For the Nigeria’s economy, the CBN’s decision to hold rates steady underscores its priority of maintaining price stability while supporting economic recovery.

By keeping rates unchanged, the central bank aims to give ongoing policy measures more time to take full effect before considering any adjustments.

According to the communique, the committee “reiterated the importance of coordination between fiscal and monetary authorities to sustain economic growth while addressing inflationary risks.”