Policymakers at the Central Bank of Nigeria (CBN) are projected to leave the monetary policy rate unchanged at 27.5% for the second consecutive meeting as inflationary pressures remain elevated and economic signals remain mixed.
According to a Bloomberg survey of seven economists, all participants expect the Monetary Policy Committee (MPC), chaired by Governor Olayemi Cardoso, to maintain the status quo at the conclusion of its May meeting scheduled for Tuesday afternoon in Abuja.
The decision comes amid persistent inflation challenges despite the recent rebasing of the consumer price index in January.
Inflation slowed marginally to 23.7% year-on-year in April, yet it remains above the CBN’s target and continues to be driven by structural factors and currency volatility.
Samantha Singh-Jami, an analyst at Rand Merchant Bank, noted that the central bank may exercise caution due to the “slightly uneven inflation trend” following the rebasing.
She added that this dynamic is likely to delay any immediate interest rate reductions.
In April, the naira depreciated by approximately 4% against the U.S. dollar, as global markets reacted to a 10% tariff imposed by the United States on trading partners. The policy shift triggered market disruptions and added pressure to Nigeria’s import-dependent economy.
Furthermore, declining oil prices — a critical source of foreign exchange for the country — have contributed to the weakening of the naira and have complicated inflation projections.
Brendon Verster, economist at Oxford Economics, said the MPC may adopt a wait-and-see approach.
“Monetary authorities may not be too concerned about potential growth weakness, leaving the apex bank to focus on stunting price pressures,” Verster stated.
Nigeria’s gross domestic product figures for Q1 2025 are yet to be released, but early indicators suggest relative stability in the non-oil sector, despite the prevailing macroeconomic headwinds.
Analysts believe this may give the CBN enough room to sustain its contractionary policy stance without triggering significant downside risks to output.
President Bola Tinubu, who will mark his second year in office on May 29, has committed to reducing inflation to 15% by year-end. However, achieving this target remains a steep challenge amid foreign exchange instability, high transport costs, and surging food prices.
At a policy event on May 12, Governor Cardoso reiterated the bank’s resolve to continue with “orthodox monetary policy” aimed at reining in inflation. However, he refrained from offering forward guidance on interest rate direction.
The CBN raised the key rate by a cumulative 600 basis points earlier in 2025, pushing the benchmark interest rate to 27.75% in March, before adjusting it slightly down to 27.5% at the last MPC meeting.
The aggressive rate hikes were intended to absorb excess liquidity and stabilize the exchange rate, which had witnessed sharp fluctuations in the preceding months.
Investors and market participants are closely watching today’s decision, as it may shape near-term portfolio flows, bond yields, and interbank lending rates.
A decision to maintain the current rate would signal a continuation of the CBN’s price stability mandate over growth expansion.
The MPC’s official decision is expected after 2 p.m. local time.
