The Central Bank of Nigeria (CBN) has elected to maintain its benchmark lending rate at 27.5% during the first monetary policy meeting of 2025. This marks the first time in over a year that the CBN has opted to keep interest rates unchanged.
In addition to the decision on the monetary policy rate (MPR), the CBN also confirmed that other key policy rates would remain unchanged.
The cash reserve ratio (CRR) for deposit money banks (DMBs) was maintained at 50.0%, while merchant banks saw their CRR remain at 16.0%. The liquidity ratio (LR) stayed steady at 30.0%, and the Asymmetric Corridor around the MPR was kept at +500/-100 basis points.
CBN Governor Olayemi Cardoso announced the decision on Thursday, attributing it to the ongoing stability in both the nation’s exchange rate and the price of Premium Motor Spirit (PMS), commonly known as petrol.
However, Cardoso highlighted that the decision was made with ongoing inflationary pressures in mind.
Following the rebasing of the Consumer Price Index (CPI), Nigeria’s inflation rate fell to 24.85% in January 2025. He also emphasised the growing collaboration between the monetary and fiscal arms of the government, underscoring its importance in stabilising the economy and rebuilding investor confidence.
Under Cardoso’s leadership, which began in 2023, the CBN had aggressively raised interest rates, responding to the challenges posed by rising inflation and a volatile naira.
With inflation reaching alarming levels, the CBN’s strategy centred on tightening monetary policy in an effort to stabilise the currency and curb price increases. These measures included consecutive hikes to the benchmark lending rate, which directly affected borrowing costs for individuals and businesses across the country.
The decision to maintain the rate at 27.5% comes at a time when the naira has shown some resilience against the U.S. dollar throughout 2025.
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For many Nigerians, this rate freeze is welcome news. Individuals and businesses have felt the pressure of the high lending rates, which have significantly impacted access to credit.
The CBN’s decision provides some breathing room for businesses reliant on loans for operations and growth, as well as for individuals grappling with the high costs of financing. While high rates may still challenge economic growth in the short term, the stability in exchange rates and fuel prices offers some reassurance.
