Nigeria MPC Retains MPR at 27.0% - Here is what the CBN's decision means to you

Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) on Tuesday unanimously voted to hold the Monetary Policy Rate (MPR) at 27.0 per cent. This decision, reached at the 303rd meeting on November 25, 2025, signals a tactical pause in the aggressive tightening cycle, allowing the market to absorb the impact of previous rate hikes.

The primary goal remains the same: sustaining the multi-month deceleration in inflation and ensuring the stability of the Naira.

Key Decisions

The MPC adjusted only one major lever—the Standing Facility Corridor—while maintaining the high liquidity mop-up ratios:

• Monetary Policy Rate (MPR): Retained at 27.0%.

• Standing Facility Corridor: Adjusted to +50/-450 basis points around the MPR (previously +250/-250 basis points in September 2025). This narrows the gap for accessing CBN funds, suggesting a more precise control of short-term liquidity.

• Cash Reserve Requirement (CRR): Retained at 45.0% for Deposit Money Banks (DMBs), 16.0% for Merchant Banks, and 75.0% for non-TSA public sector deposits.

• Liquidity Ratio (LR): Retained at 30.0%.

“The Committee’s decision was underpinned by the need to sustain the progress made so far towards achieving low and stable inflation.”

Data Justifying the Pause

The MPC cited several positive trends suggesting the tightening strategy is yielding results, making a further rate hike unnecessary for now.

• Inflation Deceleration: Headline inflation declined for the 7th consecutive month, dropping sharply to 16.05% in October 2025 (from 18.02% in September 2025). Food inflation moderated to 13.12%, reflecting improved supply and a stable exchange rate.

• Economic Growth: Real Gross Domestic Product (GDP) growth strengthened to 4.23% in Q2 2025 (up from 3.13% in Q1 2025). The Purchasing Manager’s Index (PMI) hit a five-year high of 56.4 points in November 2025, pointing to continued growth.

• External Sector Robustness: Gross external reserves increased significantly by 9.19% to reach US$46.70 billion in November 2025, providing cover for over 10 months of imports. 

The Verdict: Cautious Optimism

The MPC's decision to hold the rate is a statement of cautious confidence. They believe the lagged effect of previous aggressive hikes is still working its way through the economy and requires time to fully transmit.

Members further acknowledged the positive impact of collaborative fiscal and monetary efforts, including the recent sovereign credit rating upgrade and Nigeria's delisting from the FATF grey list, which is expected to boost investor confidence and capital inflows.

The next critical decision point will be the MPC meeting scheduled for February 2026.