CBN holds interest rate for first time since May 2022

By Mary Adenike

The Central Bank of Nigeria left its key interest rate unchanged at 27.5 percent at the end of its first Monetary Policy Committee meeting of the year.

The CBN embarked on an aggressive rate hiking cycle last year, raising the monetary policy rate by a total of 875 basis points to 27.5 percent. While it translated to huge interest incomes for banks, it put immense pressure on businesses as borrowing costs surged. The hiking cycle started in May 2022, when the MPR was increased by 150bps to 13%.

Most analysts expected a hold, citing the recent rebasing of the consumer price index (CPI) and a need to allow the previous hikes in interest rates to reflect on the economy.

The National Bureau of Statistics (NBS) on Tuesday rebased the CPI reading, which revealed a sharp reduction in Nigeria’s headline inflation rate to 24.5 percent y/y in January 2025 compared with the pre-rebasing reading of 34.8 percent y/y in December 2024.

The committee also voted to retain the asymmetric corridor at +500bps/-100bps, the cash reserve ratio for deposit money banks at 50 percent and merchant banks at 16 percent, and the liquidity ratio at 30 percent.