The Central Bank of Nigeria has decided to maintain its tough monetary policy stance, keeping the benchmark interest rate at its current record high level. This means Nigerian businesses and individual borrowers will have to wait longer for any relief from expensive loan facilities.
MPC Holds Firm on Key Rates
Following the 303rd Monetary Policy Committee meeting held in Abuja on Tuesday, November 25, the 12-member committee unanimously voted to retain the Monetary Policy Rate at 27%. The decision reflects the bank's continued commitment to tackling persistent inflation despite recent slight improvements in price pressures.
CBN Governor Olayemi Cardoso explained that the committee believes the current tightening measures are beginning to yield positive results. He pointed to slowing inflation rates and improved foreign exchange market liquidity as early indicators that the policy direction is working.
Complete Policy Parameters Unchanged
The MPC maintained all key policy indicators at their current levels, signaling continuity in the central bank's approach to economic stabilization. The specific decisions include:
The Cash Reserve Ratio remains at 45% for Deposit Money Banks and 16% for Merchant Banks. The controversial 75% CRR on non-TSA public sector deposits also stays in place.
Other unchanged parameters include the 30% Liquidity Ratio, while the asymmetric corridor around the MPR was adjusted to +50/-450 basis points, giving the bank more flexibility in managing short-term financial system operations.
Implications for Borrowers and Businesses
The decision means commercial banks will continue to charge high interest rates on loans, making borrowing expensive for both businesses and individuals. Many analysts had anticipated a rate reduction following October's inflation drop to 16%, but the CBN appears determined to maintain its hawkish stance.
Small and medium enterprises seeking expansion capital and individuals planning major purchases through loans will need to reconsider their timing or explore alternative financing options. The cost of business operations is likely to remain elevated, potentially affecting profitability and growth projections.
The committee also reviewed the standing facilities corridor and approved changes designed to strengthen monetary policy transmission mechanisms. These adjustments aim to provide the central bank with better tools for managing short-term borrowing and deposit activities within Nigeria's financial system.
With key parameters unchanged, the CBN has signaled that it will maintain its current policy direction as it works to stabilize the macroeconomic environment and guide inflation back toward its medium-term target. The bank's leadership appears convinced that sustaining the tight monetary stance is necessary for achieving lasting price stability and restoring investor confidence in the Nigerian economy.
