Nigeria’s Central Bank holds rates steady at 27.50% as inflation cools

Nigeria’s Central Bank (CBN) has opted to keep its benchmark interest rate unchanged at 27.50% for a second consecutive time, a decision largely driven by the recent moderation in headline inflation. The Consumer Price Index (CPI) eased to 23.71% last week, reinforcing expectations among economists for a pause in the aggressive rate hikes seen over the past two years under President Bola Ahmed Tinubu.

A Condia survey of five economists had widely predicted the hold, with analyst Samuel Oyekanmi of Norrenberger noting, “Looks like a hold decision from where I sit.” Oyekanmi, who had previously forecast a more dovish stance, highlighted the CBN’s restraint on further hikes in 2025.

This sentiment is already reflected in the fixed income market, where yields have begun to trend downward. Nigerian Treasury Bills (NTBs) and FGN bonds in the secondary market have seen yields decline by 463 basis points and 56.3 basis points year-to-date, respectively, according to Norrenberger’s inflation report.

Cardoso explained that the committee unanimously decided to retain the MPR at 27.50% due to an easing of headline inflation.

“The MPC noted the relative improvements in some key macroeconomic indicators, expected to support the overall moderation in prices in the near to medium term,” Cardoso said during the 300th MPC briefing held in Abuja.

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“The narrowing of the gap between the Nigerian foreign exchange market and BDC windows, the positive balance of payments position and the easing price of PMS. Members also noted with satisfaction the progressive moderation in food inflation and complimented the government for the measures in improving food supply, “he added.

All eyes however look to the next rate setting meeting. At the moment, Nigerians have continued to battle elevated food prices due to insecurity in food producing states, high energy and data costs. These underlying issues are sure to put pressure on the headline inflation in the coming months.

Cardoso claims to be full committed to stabilising the price hence his call for improved security at today’s meeting. Time will be ultimate deciding factor in the decision to hold or raise interest rates.