MPC Likely to Hold MPR at 27.5%, Room for Modest Hike
Lagos, May 18, 2025 – The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) is expected to maintain the Monetary Policy Rate (MPR) at 27.5% during its upcoming meeting, according to analysts and recent posts on X. However, there is speculation that the committee may consider a modest rate hike due to persistent inflationary pressures and global economic uncertainties.
The decision to hold the MPR steady follows the MPC’s unanimous vote in February 2025 to retain the rate at 27.5%, alongside maintaining the Cash Reserve Ratio (CRR) at 50% for Deposit Money Banks and 16% for Merchant Banks, with the Liquidity Ratio (LR) at 30%. This followed a 25-basis-point increase from 27.25% in November 2024, reflecting the CBN’s cautious approach to balancing inflation control with economic growth.
Analysts suggest that Nigeria’s inflation rate, reported at 24.48% in February 2025, remains a key concern, particularly as it lags behind the MPR. The gap between the MPR and inflation indicates a tight monetary policy stance aimed at curbing price pressures, though some argue it may constrain economic growth. A recent post on X noted, “The Monetary Policy Committee (MPC) retained the Monetary Policy Rate (MPR) at 27.50% while inflation rate is 24.48%. How and why should MPR be higher than inflation?” This reflects ongoing debates about the CBN’s strategy.
Despite the expectation to hold rates, there is room for a modest hike if inflationary risks intensify. Factors such as global trade tensions, including U.S. tariffs impacting emerging markets, and volatile commodity prices could push the MPC to tighten policy further. A report from Nairametrics highlighted that while the MPR is likely to remain unchanged, “room remains for a modest hike” to address potential upside risks to inflation.
The CBN’s focus remains on stabilizing the naira and managing liquidity, with the MPC emphasizing flexible exchange rate management and liquidity support measures. Economists note that the committee’s decisions will hinge on incoming data, particularly on food prices and global economic developments. The MPC’s next meeting is anticipated to provide further clarity on Nigeria’s monetary policy trajectory amidst these challenges.