The Central Bank of Nigeria (CBN) on Tuesday retained its Monetary Policy Rate at 27 per cent after the Monetary Policy Committee (MPC) concluded its meeting in Abuja, with Governor Olayemi Cardoso saying the decisions were taken to consolidate the progress already made in moderating inflation and stabilising the financial system.
Cardoso said that all 12 committee members were present and that the majority voted to keep the monetary policy rate unchanged while adjusting the standing facility corridor around the MPR to +50/-450 basis points.
The MPC also resolved to maintain the cash reserve requirement for deposit money banks at 45 per cent, keep merchant banks’ CRR at 16 per cent, apply a 75 per cent CRR on non-TSA public sector deposits, and retain the liquidity ratio at 30 per cent.
He said the decisions were guided by the need “to sustain the progress made so far towards achieving low and stable inflation,” adding that the committee would continue to rely on a data-driven evaluation of economic conditions before taking further steps.
Cardoso said the MPC welcomed the continued slowdown in inflation for the seventh consecutive month in October 2025. According to him, the easing of inflationary pressure was supported by sustained monetary tightening, a stable exchange rate, increased capital inflows, and a surplus in the current account balance. He added that relative stability in the price of Premium Motor Spirit (PMS) and improved food supply also contributed to the pace of disinflation.
However, he cautioned that inflation remained high. “Headline inflation is still in double digits, and that requires sustained efforts to moderate it further,” he said. The committee, he noted, agreed that the decline across headline, core and food inflation suggested that the lagged effect of existing policy measures would continue to impact the economy favourably in the months ahead.
Cardoso explained that keeping policy parameters unchanged at this time was necessary to ensure that previous rate hikes transmit effectively to the real economy. “Maintaining the current stance of policy, amidst lingering global uncertainties, would allow the effect of previous policy rate hikes to sufficiently transmit to the real economy and further reduce prices,” he said.
He also spoke about the external sector, noting that members of the committee acknowledged “the robust performance of the external sector, evidenced by the surplus current account balance and steady accretion to reserves, which have contributed to stability in the exchange rate and moderation in inflation.” According to him, the recent upgrade of Nigeria’s sovereign credit rating and the country’s removal from the FATF grey list were outcomes of the strong cooperation between fiscal and monetary authorities.
Turning to Nigeria’s $46.7 billion external reserves, the governor said the country was in a favourable position. “On reserve adequacy, we currently have about 10 months of import cover, which is a very good position. In fact, the underlying strength is even greater, as there is significant liquidity within the market that may not be immediately obvious.”
He linked the boost in reserves to rising non-oil exports, improved oil production, higher remittances, and increasing portfolio investment. “A more competitive currency encourages exports, and we are seeing this especially in non-oil exports. Oil production has also improved compared with where we were previously,” he said.
“International remittances have risen as well. The important thing is that reserves are being built in a systemic and sustainable way. Portfolio investors are returning because reforms have made Nigeria more attractive, and the market is now more open and transparent.”
Cardoso noted that broader economic conditions were improving after a turbulent period. “The macro indicators are looking a lot better, and inflation has come down steadily. This time last year it was over 34 percent, and now we are around 16 percent,” he said.
He described the return to stability as a turning point for long-term growth. “A year and a half or two years ago, there was a lot of instability in our markets. When markets are unstable, investors who would normally invest stay away. Now we have moved from instability to stability. After stability comes investment, and after investment comes growth.”
According to him, recent GDP figures signal that growth momentum is returning. “If you look closely, you will see that growth has returned over the last couple of quarters. With stability now achieved, investor confidence rises, investment follows, and the issues you mentioned become easier to address.”
Cardoso defended the CBN’s decision to end direct interventionist lending, saying past programmes created significant fiscal and financial risks. “We did a study of past CBN interventions and found that total interventions amounted to about N10.93 trillion over many years. Out of this, N4.69 trillion—about 43 percent—is still outstanding. Since we came in, we have been able to recover about N2 trillion, but the remaining amount is still very large.”
He said the bank could not initiate new interventions under such conditions. “We cannot embark on new interventions without risking further distortions. Excessive interventions in the past contributed to economic instability.”
According to him, the CBN’s shift to a catalyst role, rather than a direct lender, was already yielding results. “In the past, central-bank interventions discouraged commercial players—who could not compete with subsidised CBN rates—from innovating or developing new products. There was also a moral hazard problem: loans were taken as if they did not need to be repaid.”
He said the new approach supports development finance using market-driven channels. “We are supporting others to make meaningful impact, but in a responsible, sustainable and market-driven way. With proper structure, we believe this approach will ultimately unlock more development finance than past interventions did.”
Cardoso also referenced Nigeria’s recent removal from the FATF grey list, describing it as a significant achievement. “The Central Bank, NFIU, SEC, EFCC, the Ministry of Finance and all the security agencies worked with incredible unity. This was specially acknowledged by the FATF team. The Vice-President himself attended and chaired the session, demonstrating strong national commitment.”
He said the country must guard against falling back into previous lapses. “We were not on the grey list three years ago, so certain things happened that pushed us into it. Now that we are off it, everything must be done to ensure we do not slip back.”
Cardoso added that the exit would improve the global perception of Nigerian banks. “When you are on the grey list, correspondent banks become cautious; once you exit, they are far more willing to deal with Nigerian banks, and pricing becomes more competitive.”
On the stability of the foreign exchange market, he stressed that the gains were a result of market forces, not artificial support. “We now run a system of willing buyers and willing sellers. People buy and sell freely, and the process is open and transparent. Our NFEM system allows everyone to see who is buying and who is selling.”
He noted that average daily turnover in the FX market now stands at $500 million, often without CBN participation. “In the past, if the CBN did not intervene, nothing happened. That era is gone.”
According to him, transparency and consistency have restored confidence in the system. “The spread has narrowed from about 60 percent when we began reforms, to around 2 percent today.”
Cardoso added that Nigerians were already feeling the impact. “Travellers are witnessing the benefits. The fear and uncertainty that once characterized the market have disappeared. Nigerians can travel and pay with their naira cards without the anxiety that once existed. Nigerians are increasingly proud to hold the naira—and that is a very positive development.”
Looking ahead, the MPC projected continued moderation in inflation. The committee’s outlook, he said, is that disinflation will persist in the near term, driven largely by the delayed effects of previous tightening measures, sustained stability in the foreign-exchange market, and increased food supply from the ongoing harvest season.
Cardoso concluded that the MPC “remains committed to an evidence-based policy approach towards achieving the Bank’s mandate of price and financial system stability.”
Dr. Samson Galadima Simon, Chief Economist at ARKK Economics and Data Limited, Abuja, reacting to this development told The Nation that, “While all forms of inflation; headline, core and food; have been decelerating from the beginning of the year, they’re not doing so at same pace.
“Food inflation; which is not within the CBN’s purview; is leading the charge. It has reduced by half from 26.08 percent in January to 13.12 percent in October. Core inflation, which squarely sits in the CBN’s remit seems downward stick. As it reduced by a relatively measly a fifth from 22.53 percent to 18.67 percent.,”
This, he said “shows clearly that the CBN’s job is far from being done. Furthermore, globally inflation target is 1-3 percent and locally in Nigeria it is 6-9 percent. And headline inflation for October is at 16.05 percent . This is twice the ideal. This again, demonstrates it is not yet uhuru. So the CBN in right in holding rates. As it would be premature to cut and growth and supply side would be hampered.
