The Central Bank of Nigeria's (CBN) Monetary Policy Committee (MPC) commenced its two-day meeting on Monday, May 19, 2025, to deliberate on critical economic parameters including inflation, interest rates, and the naira exchange rate.
The meeting, scheduled to conclude on Tuesday, May 20, comes at a crucial time as Nigeria's inflation rate dropped to 23.7 percent in April, according to the latest Consumer Price Index report released by the National Bureau of Statistics last Thursday.
The committee faces the challenging decision of whether to maintain the current interest rate at 27.50 percent or adjust its monetary policy stance in response to the country's economic indicators.
Recent exchange rate data from the CBN showed the naira trading at N1,598.72 per dollar in the official market, while parallel market rates stood at N1,635 as of Friday last week, highlighting ongoing currency pressures.
Expert Recommendations Against Further Tightening
Muda Yusuf, a renowned economist and Chief Executive Officer of the Centre for the Promotion of Private Enterprise, has advised against further monetary policy tightening.
"The tightening option, I don't think that should be on the table for now because the rates are already very high, the cash reserve ratio is already 50 percent, which is the highest anywhere in the world, and the MPR is already 27.5, one of the highest anywhere in the world," Yusuf stated.
He further explained that the asymmetric corridor of +500 basis points around the Monetary Policy Rate (MPR) means the effective rate could reach as high as 32.5 percent, which he considers already excessive.
The MPC previously maintained interest rates during its February meeting, aligning with CBN Governor Olayemi Cardoso's commitment to orthodox monetary policy approaches in tackling the country's inflation challenges.
Financial analysts are closely watching this meeting, with many expecting the committee to hold rates steady given the recent inflation decline and the already high interest rate environment.
The outcome of the MPC meeting will be critical for businesses, investors, and consumers as it will influence borrowing costs, investment decisions, and overall economic activity in Nigeria for the coming months.
