The Central Bank of Nigeria (CBN) has decided to hold the monetary policy rate at 27 per cent, a move confirmed after its recent Monetary Policy Committee meeting. While some analysts anticipated a further cut, the majority of the committee judged that keeping the benchmark rate steady was the most prudent course for now.
Governor Olayemi Cardoso explained that although inflation is showing signs of cooling, it remains uncomfortably high. The committee believes that another cut could be premature given lingering economic vulnerabilities, especially in foreign exchange markets and fiscal pressures. In his own words, he emphasized that this stance is needed to “sustain the progress made so far towards achieving low and stable inflation.”
The decision comes against a backdrop of declining, yet still elevated, inflation. Headline inflation eased to 16.05 per cent in October, down from earlier peaks but still stubbornly high. The CBN noted that this deceleration is being supported by a relatively stable naira, increased capital inflows, and a narrowing gap in the currency market.
Economists see this pause not as a sign of tightening, but as a measured easing. While the Monetary Policy Rate (MPR) remains at 27%, the CBN has adjusted its deposit corridor, widening it to encourage banks to lend more rather than park funds at the central bank. This signals growing confidence within the apex bank about inflation’s downward path and external stability, but also a cautionary approach toward future rate cuts.
Critics argue that high rates are still weighing on economic growth. Some business leaders warn that steep borrowing costs are hindering investment, especially in manufacturing and export sectors. For many firms, access to credit remains difficult and expensive, limiting their ability to expand or modernize.
In defending its decision, the CBN also pointed to improving macroeconomic conditions: foreign reserves have strengthened, inflation is moderating, and “the progressive narrowing of the gap between the official and parallel foreign-exchange markets” is expected to support price stability. Still, the committee stressed the need for continued effort to bring inflation to single digits, a goal not likely to be rushed.
By holding its benchmark rate at 27 per cent, the CBN aims to balance disinflation with economic growth. Lowering the rate too quickly could stoke inflation again, while keeping it high deters much-needed credit for businesses. The decision underscores the central bank’s cautious path to stabilize both prices and growth.
