CBN MPC OUTCOME REVIEW
CBN MPC OUTCOME REVIEW All Parameters Held: Reading the 306th MPC Communiqué 306th MPC Meeting • 20–21 July 2026. EXECUTIVE SUMMARY The Central Bank of Nigeria’s Monetary Policy Committee (MPC) held its 306th meeting on 20-21 July 2026 and voted unanimously, for the second consecutive meeting, to leave every policy parameter untouched. The Monetary Policy Rate (MPR) stays at 26.50%, the asymmetric corridor at +50/-450 basis points, the Cash Reserve Ratio (CRR) at 45% for deposit money banks and 16% for merchant banks, 75% CRR on non-TSA public sector deposits, and the Liquidity Ratio at 30%. This is a continuation, not a pivot: the CBN has now held rates since the last cut in February 2026, prioritising exchange rate and price stability over a resumption of easing. Governor Olayemi Cardoso framed the hold as a response to a global risk environment that has deteriorated even as domestic inflation has begun to soften. Headline inflation eased marginally to 15.91% y/y in June 2026 from 15.93% in May, snapping three straight months of increases — but food inflation, the component that matters most to household welfare, climbed further to 17.52%. Renewed hostilities in the Middle East, the dollar-pricing of domestic petroleum products, and an elevated federal government domestic borrowing programme all argue, in the CBN’s own words, for caution over a premature cut. Policy Parameter 306th MPC Decision (July 20-21, 2026) Monetary Policy Rate (MPR) Retained at 26.50% Asymmetric Corridor around MPR Retained at +50 / -450 basis points Cash Reserve Ratio (CRR) – Deposit Money Banks Retained at 45.00% CRR – Merchant Banks Retained at 16.00% CRR – Non-TSA Public Sector Deposits Retained at 75.00% Liquidity Ratio Retained at 30.00% Headline Inflation (y/y, June 2026) 15.91% (from 15.93% in May 2026) Food Inflation (y/y, June 2026) 17.52% — extended its upward trend WHY THE MPC CHOSE TO HOLD Several forces converged to make a hold the path of least regret for the Committee: TRANSMISSION CHANNELS: SHORT-TERM OUTLOOK (NEXT 3 MONTHS) Over the coming quarter, a hold is a signal of continuity rather than a shock — markets had broadly priced this in. The near-term effects are therefore more about the absence of relief than about fresh tightening: Dimension Expected Effect Liquidity System liquidity stays tight by design. With CRR at 45% and a 75% levy on non-TSA public deposits, a large share of banking-sector deposits remains sterilised at the CBN. Expect continued liquidity swings around FAAC disbursements and NTB/bond settlement dates, with the CBN using OMO and repo windows to fine-tune naira liquidity rather than any structural loosening. Money Market NTB and OMO stop rates should stay elevated and broadly stable, holding real (inflation-adjusted) returns attractive to banks, pension funds, and offshore portfolio holders. Expect continued strong demand at primary auctions, supporting the FG’s borrowing programme — precisely the outcome the MPC is engineering. Inflation Rate Headline inflation likely drifts sideways to marginally lower in Q3, helped by base effects and the recent softening in transport costs, but food inflation remains the swing factor. A Middle East-driven energy shock would quickly reverse the June improvement. Productive Economy (Real Sector) Borrowing costs for manufacturers, agro-processors and SMEs remain punitive at prevailing lending rates (well above the 26.5% MPR once bank spreads are added). Expect continued muted private-sector credit growth, working-capital strain, and a bias toward short-tenor, high-margin lending by banks rather than long-term productive investment. FPIs and FDIs High real yields keep Nigeria attractive for Foreign Portfolio Investment (FPI) into fixed income — ‘hot money’ carry trades should remain supported. Foreign Direct Investment (FDI), which cares more about growth, policy predictability and FX convertibility than about the policy rate, is likely to stay muted; a hold is neutral-to-mildly-positive for FDI sentiment mainly through the signal of policy consistency. Exchange Rate The hold is explicitly framed around defending FX stability. Sustained high real rates continue to support carry-trade inflows that help the naira hold its range in the official window. Absent a fresh oil-price or capital-flow shock, expect relative near-term naira stability, with periodic pressure around import demand and dollar-denominated fuel settlement. TRANSMISSION CHANNELS: MID-TERM OUTLOOK (6 MONTHS) Assuming no major external shock (a larger Middle East escalation, a sharp oil-price spike, or a global risk-off event), the mid-term picture is one of gradual normalisation rather than a change in direction: Dimension Expected Effect Liquidity System liquidity should stay tight but more predictable, as banks and the market adapt fully to the CRR/liquidity ratio regime. Expect the CBN to lean more on open-market operations for fine-tuning, with structural policy parameters unchanged unless inflation surprises meaningfully to the downside. Money Market If disinflation becomes more convincing (a run of consecutive declines, not one month), the CBN’s own commentary and analyst consensus point to the easing cycle plausibly resuming only after the 2027 election cycle, or with a modest cut late in 2026 at the earliest. Money market rates should stay firm, keeping fixed-income instruments attractive to both local and offshore investors. Inflation Rate Base effects from 2025’s high print should continue to pull the headline rate down mechanically over the next two quarters, but the food and energy components remain the key risk. A durable move toward single digits is unlikely within six months; a gradual grind lower, with volatility around energy and FX passthrough, is the more probable path. Productive Economy (Real Sector) Six months of unchanged, high policy rates mean real-sector financing conditions stay restrictive for longer. Sectors reliant on imported inputs (manufacturing, agro-processing, pharmaceuticals) continue to face margin pressure. Some relief may come indirectly through FX stability and moderating energy costs rather than through cheaper credit. FPIs and FDIs Continued high real yields should keep FPI inflows into Nigerian fixed income supportive of reserves and the naira over the period, though these flows remain sensitive to global risk appetite and can reverse quickly. FDI recovery will depend far more on structural reforms, gas
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Nigeria’s Triple Rating Upgrade and the Trickle-Down Gap: Macroeconomic Signals vs. Street-Level Realities
An Independent Economic Analysis | Temitayo Gbenro. ABSTRACT On May 15, 2026, S&P Global Ratings upgraded Nigeria’s long-term sovereign credit rating from B- to B with a stable outlook, the country’s first such upgrade in fourteen years, completing a clean sweep by all three major global agencies (Fitch and Moody’s having upgraded in 2025). The upgrade reflects genuine structural achievements: FX reserves now stand at $50 billion, the debt-to-revenue ratio has fallen sharply, oil output has risen, and the Dangote refinery has materially transformed the external balance. Yet simultaneously, the World Bank reports that 63% of Nigerians, some 140 million people, live below the poverty line as of 2025, up from 40% in 2019. This paper investigates the gap between these two realities. It asks: is the macroeconomic improvement genuine, is it being measured accurately, and why is there no visible trickle-down to the average Nigerian? The answer is neither ‘vague statistics’ nor ‘give it more time’, it is more uncomfortable: the reforms are real, the improvements are real, but the architecture of Nigeria’s economy means that sovereign-level gains do not automatically translate to household welfare, and without structural intervention, they may not for a very long time. 1. Introduction: Two Nigerias, One Moment On the same Friday in May 2026, two very different pieces of news described the same country. The first: S&P Global Ratings upgraded Nigeria’s long-term sovereign credit rating to ‘B’ from ‘B-‘, with a stable outlook — the first upgrade from S&P in fourteen years, following similar actions by Fitch and Moody’s in 2025. Government ministers celebrated what they described as ‘growing international confidence in Nigeria’s economic reform trajectory.’ The second: a market trader in Oshodi explained she now cooks less food each morning because demand has collapsed. ‘Before, I dey cook plenty food and I go sell am finish,’ she said. ‘Now, even the small one wey I cook go still remain.’ These two descriptions are not in contradiction. They are both true. That is precisely the analytical challenge this paper sets out to address. Nigeria’s recent macroeconomic story is real — the numbers are not fabricated, the structural shifts are not cosmetic, and the reforms are not trivial. But ‘macroeconomic improvement’ and ‘improvement in living standards’ are fundamentally different things, and Nigeria’s current trajectory illustrates in stark terms why they can diverge so dramatically, for so long, even in the presence of genuine reform. This paper investigates three core questions: 2. What the Macro Data Actually Shows It is important to begin with intellectual honesty: the macroeconomic improvements described by the rating agencies are substantive. To dismiss them entirely as ‘vague statistics’ would itself be inaccurate. 2.1 The Credit Rating Upgrade: What It Measures Sovereign credit ratings assess a government’s ability and willingness to meet its debt obligations. They are not welfare indices. They do not measure food prices, employment quality, or purchasing power of the median household. Understanding this is foundational: a B rating upgrade tells us that Nigeria is a more reliable borrower than it was, no more, no less. What drove the upgrade, according to S&P, is a coherent list of fiscal and external improvements: These are not trivial achievements. Nigeria in 2022 had a debt-service-to-revenue ratio that consumed over half of all government revenue. The FX market was characterized by multiple parallel rates, endemic distortions, and a chronic shortage of dollars. These conditions have materially changed. Indicator 2023 2026 (Projected) FX Reserves $33 billion $50 billion Debt-to-Revenue Ratio ~500% ~338% Govt. Revenue (% of GDP) 7.3% 12.4% Current Account Balance Deficit +5.8% of GDP Headline Inflation ~29% ~17.7% Real GDP Growth ~2.9% ~3.7%–4.3% FX Monthly Turnover Low / distorted $8.6–$10 billion Sources: S&P Global Ratings (May 2026), World Bank Nigeria Development Update (April 2026), PwC Nigeria Economic Outlook 2026. 2.2 The GDP Rebasing: Clarification, Not Fabrication Nigeria rebased its GDP in mid-2025, shifting the base year from 2010 to 2019. This raised the nominal GDP figure for 2024 from approximately $187.6 billion to $252.1 billion, a 34% statistical increase. This caused considerable public suspicion, with some interpreting the larger number as a political manoeuvre. The suspicion is understandable but partially misplaced. GDP rebasing is a standard statistical practice, recommended by the IMF to be undertaken every five years to ensure that new industries, consumption patterns, and economic activities are captured. Nigeria was significantly overdue: it had previously rebased in 2014, shifting from a 1990 base year, which had also produced a dramatic apparent jump in GDP. What the 2025 rebasing legitimately captured includes: the digital economy, informal trade, modular oil refining, and social insurance schemes that were previously unrecorded. The informal sector, which accounts for an estimated 58% to 65% of Nigeria’s GDP and employs approximately 90% of the workforce, was substantially undercounted under the old methodology. The critical point, however, is this: rebasing reveals a larger economy, but not a more productive or equitable one. As Segun Ajayi-Kadir, Director General of the Manufacturers Association of Nigeria, stated pointedly: ‘The rebasing confirms that Nigeria’s economy may be statistically larger, but it is not more productive, and certainly not more industrialised.’ The larger GDP number does not mean more income for households; it means we are now measuring more of what already exists. KEY DISTINCTION A GDP rebase does not create new wealth. It corrects the measurement of existing economic activity. Nigeria’s economy did not grow by 34% when rebasing was announced, we simply recognized that it was already larger than we thought. The confusion between statistical revision and actual growth is a legitimate grievance, and policymakers should communicate this distinction far more clearly. 2.3 Inflation: The Rebase Controversy A similar controversy applies to the Consumer Price Index (CPI) rebase. In January 2025, the National Bureau of Statistics (NBS) updated the basket of goods used to measure inflation, increasing the number of components and reducing the weight of food, which had been the primary driver of headline inflation, by as much as 10 percentage points. The effect was that
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Naira Softens Ahead of 304th MPC as Markets Price in Possible 50bps Cut
The naira weakened modestly in the official market, closing at ₦1,353.5/$, compared to ₦1,348/$ in the previous session, as investors repositioned ahead of the 304th Monetary Policy Committee (MPC) meeting of the Central Bank of Nigeria. Intraday trading reflected cautious sentiment, with the currency moving within a tight band before settling near its session average. The mild depreciation underscores one central theme: markets are no longer just waiting to see whether policy will change; but how. With inflation trending downward and reserves strengthening, attention has shifted to whether the CBN will initiate a cautious easing cycle, potentially with a 50-basis point cut. This decision carries implications across three critical dimensions: FX stability, fixed income positioning, and macro signaling credibility. 1: FX Stability: Can the Naira Withstand a Cut? Nigeria’s external reserves have climbed to $48.77 billion, providing a solid buffer against speculative pressure. FX volatility has moderated in recent months, and the parallel market premium has narrowed relative to prior stress episodes. From an exchange rate perspective, a 50bps cut: The key question is whether rate differentials remain sufficient to anchor portfolio flows. At 27%, Nigeria’s benchmark rate is already extremely restrictive. A move to 26.50% would not meaningfully erode yield appeal. Short-term reaction could see mild testing of the ₦1,360–₦1,380/$ range, but sustained instability would require a liquidity shock, not merely a marginal rate adjustment. In this context, FX stability is increasingly a function of reserve management and supply-side intervention, rather than rate levels alone. 2: Fixed Income: The Duration Trade Bond markets are highly sensitive to policy pivots. A 50bps cut would: With inflation easing, real yields remain strongly positive even after a modest cut. Institutional investors, pension funds, asset managers, banks, are likely to rotate toward longer maturities in anticipation of a gradual easing cycle. If the MPC signals further normalization ahead, the yield curve could bull-steepen, producing capital gains for long-duration holders. This is where positioning becomes strategic rather than reactive. 3: Macro Signaling: The Credibility Question Perhaps the most important dimension is narrative control. Inflation has declined for eleven consecutive months to 15.1%, and maintaining a 27% policy rate indefinitely risks appearing excessively restrictive relative to underlying price dynamics. A calibrated 50bps reduction would: Conversely, holding rates may reinforce anti-inflation credibility but risk signaling policy inertia despite improving data. The MPC must balance two competing perceptions: Base Case Outlook While a hold remains plausible, a 50bps cut to 26.50% is increasingly defensible given: Policy Forecast: Instrument Current Expected MPR 27.00% 26.5% (50bps cut_ CRR 45.00% Hold Liquidity Ratio 30.00% Hold This would represent a calibration, not a pivot. Strategic Implications If the CBN cuts: If the CBN holds: Conclusion The 304th MPC meeting represents more than a rate decision, it is a signal of how confident the Central Bank of Nigeria is in the durability of macro stability. A 50bps cut would not weaken policy credibility. It would instead communicate that the tightening cycle has done its work, and that normalization can begin carefully, under the cover of rising reserves and falling inflation. Markets are watching not just the rate, but the message behind it.
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Capital Importation and Macroeconomic Stability in Nigeria: Composition, Transmission Channels, and Structural Risks
By Temitayo Gbenro Capital importation constitutes a critical component of Nigeria’s balance of payments framework. In an open emerging economy characterized by structural FX demand pressures, a narrow export base, and episodic external shocks, foreign capital inflows serve as both a stabilizing instrument and a source of macroeconomic vulnerability. Within Nigeria’s external sector, capital inflows broadly take three dominant forms: Each category exhibits distinct risk profiles, transmission mechanisms, and developmental multipliers. Their macroeconomic implications differ materially. 1. Foreign Portfolio Investment (FPI) Foreign Portfolio Investment refers to cross-border investments in financial instruments without management control. In Nigeria, this typically includes: Macroeconomic Transmission Mechanism FPI primarily influences: In high-interest-rate environments, such as periods of elevated Monetary Policy Rate (MPR), Nigeria becomes attractive to yield-seeking global capital. This creates short-term FX inflows, strengthens reserves, and temporarily stabilizes the naira. Structural Limitations However, FPI is inherently pro-cyclical and highly sensitive to: Sudden reversals (“capital flight”) can: FPI enhances liquidity but does not expand productive capacity. Its developmental elasticity is limited. 2. Foreign Direct Investment (FDI) Foreign Direct Investment involves long-term capital committed to physical assets or controlling stakes in enterprises. Unlike portfolio flows, FDI reflects confidence in structural fundamentals rather than short-term yield arbitrage. Developmental Channels FDI contributes to: For Nigeria, sectoral distribution is critical. FDI concentrated in extractive industries (e.g., crude oil) has historically produced enclave growth with limited spillovers. In contrast, FDI in: generates broader value-chain multipliers. Stability Profile FDI is relatively inelastic to short-term shocks because it involves sunk costs. It is therefore: In long-term growth modeling, FDI is positively correlated with total factor productivity (TFP) improvements. 3. Diaspora Remittances Remittances are unilateral transfers from Nigerians abroad to domestic households. Nigeria remains one of Africa’s largest recipients of diaspora flows. Macroeconomic Effects Remittances influence: Unlike FPI, remittances are counter-cyclical: they often increase during domestic economic stress. However, their macroeconomic multiplier depends on utilization patterns. If predominantly consumption-driven without corresponding domestic supply expansion, remittances may: They are socially stabilizing but not inherently industrializing. Comparative Economic Characteristics Variable FPI FDI Remittances Volatility High Low Low–Moderate Time Horizon Short Long Continuous FX Impact Immediate, reversible Stable Stable Productive Capacity Minimal High Indirect Employment Impact Limited Direct Indirect Policy Sensitivity High Moderate Low From a macro-structural standpoint, the optimal capital structure for Nigeria would prioritize FDI and stable remittance flows while minimizing excessive dependence on speculative portfolio capital. Dutch Disease Risk Conceptual Framework Dutch Disease describes a structural macroeconomic distortion whereby large foreign currency inflows, typically from natural resource exports or capital surges, lead to real exchange rate appreciation, thereby undermining the competitiveness of non-resource tradable sectors. The term originated from the Netherlands’ post-1960s natural gas boom but is applicable to resource-dependent economies such as Nigeria. Mechanism of Transmission The process unfolds in three stages: 1. Foreign Currency Inflow Surge This may arise from: 2. Real Exchange Rate Appreciation Increased FX supply strengthens the domestic currency in real terms. This can occur via: 3. Sectoral Resource Reallocation Capital and labor migrate toward: Meanwhile: lose competitiveness due to higher production costs relative to global peers. Nigerian Context Nigeria’s heavy dependence on crude oil exports makes it structurally susceptible to Dutch Disease dynamics. When oil prices are elevated: Consequently: This dynamic entrenches mono-product dependence. Conversely, during oil price downturns: The economy experiences asymmetric volatility: boom-driven distortion followed by bust-driven instability. Capital Importation and Dutch Disease Large portfolio inflows can replicate Dutch Disease effects even outside commodity booms. For example: Similarly, remittance surges without supply-side expansion can intensify import consumption and widen current account pressures. Thus, capital inflows — if not sterilized or productively allocated, may create exchange rate misalignment and structural de-industrialization. Policy Mitigation Strategies To mitigate Dutch Disease risks, Nigeria must: Conclusion Capital importation is not inherently growth-inducing. Its developmental outcome depends on: For Nigeria, sustainable economic transformation requires a strategic pivot from volatile financial inflows toward productivity-enhancing investment. Absent structural reforms, capital inflows may temporarily strengthen macro indicators while simultaneously deepening long-run fragility. The central macroeconomic imperative is therefore compositional optimization, attracting capital that builds productive capacity rather than capital that merely circulates within financial markets. Written By, Temitayo Gbenro,
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Decoupled Inflation: Why Food Prices Defy Nigeria’s Monetary Tightening
Abstract Recent macroeconomic data in Nigeria reveal a decoupling between headline inflation, which shows signs of moderation, and food inflation, which remains elevated. This divergence presents a critical challenge for monetary policymakers and calls for a nuanced understanding of inflation drivers in Nigeria. While monetary tightening by the Central Bank of Nigeria (CBN) has contributed to the decline in headline inflation, food inflation persists due to structural inefficiencies, supply chain disruptions, and cost-push pressures. This paper investigates the factors behind these diverging inflation trends and provides a forward-looking projection of the next Monetary Policy Committee (MPC) decisions with respect to the Monetary Policy Rate (MPR), asymmetric corridor, Cash Reserve Ratio (CRR), and Liquidity Ratio (LR). 1. Introduction Inflation is a central concern for emerging market economies, especially where price instability directly impacts real income, food security, and macroeconomic confidence. In Nigeria, inflationary dynamics have been particularly complex. While headline inflation declined slightly to 22.22% in June 2025, food inflation remains alarmingly high, well above 30%, threatening social stability and economic progress. This paper seeks to examine the reasons behind this dichotomy and assess how the Central Bank of Nigeria (CBN) is likely to respond in its next Monetary Policy Committee (MPC) meeting. The central question is: why is headline inflation falling while food inflation continues to rise? And what are the implications for monetary policy? 2. Inflation in Nigeria: Disaggregating the Indicators 2.1 Headline Inflation Headline inflation measures the general change in the price level of all goods and services in an economy. It includes both volatile components (like food and energy) and core components (like services, rent, education, etc.). As a broad measure, it serves as the main indicator of inflation trends. 2.2 Food Inflation Food inflation, a subcomponent of the Consumer Price Index (CPI), captures changes in the price of food items such as cereals, meat, oils, vegetables, dairy, and beverages. In Nigeria, food accounts for over 50% of the CPI basket, making it both a key driver and a lagging influence on headline inflation. 2.3 Recent Trends Headline Inflation (June 2025): 22.22% Food Inflation (June 2025): ~30–33% Core Inflation: Significantly lower than food inflation, due to reduced imported inflation and tight monetary conditions. The data indicates that non-food components are decelerating, largely due to tighter liquidity, but food-related costs remain resistant to downward pressures. 3. Why Is Headline Inflation Declining? 3.1. Aggressive Monetary Tightening by the CBN The Central Bank has pursued one of the most aggressive tightening cycles in its history. Since 2023, the Monetary Policy Rate (MPR) has been raised multiple times, reaching 27.50% as of the last MPC. In parallel, the Cash Reserve Ratio (CRR) has been raised to 50%, and the asymmetric corridor adjusted to +500/-100 basis points. These tools have: Curbed excessive liquidity in the financial system. Increased the cost of borrowing, reducing credit-fueled demand. Helped anchor inflation expectations. Encouraged foreign portfolio inflows that supported exchange rate stability. 3.2. Stabilization of the Exchange Rate The foreign exchange market has experienced partial stabilization due to: Improved FX supply from autonomous sources. Reduction in CBN backlog obligations. Diaspora remittances. Slower speculative demand for USD. The relative stability in the naira-dollar exchange rate has reduced the imported inflation pass-through, especially for non-food imports like electronics, vehicles, and raw materials. 3.3. Base Effects High inflation in the base year (2024) due to fuel subsidy removal, exchange rate unification, and fiscal reforms means that year-on-year inflation rates now appear to moderate even if prices remain elevated. Why Is Food Inflation Still Rising? 4.1. Structural Insecurity in Food-Producing Regions A key contributor to rising food prices is rural insecurity, especially in the North-East, North-West, and parts of the Middle Belt. Farmer-herder clashes, banditry, and kidnapping have forced many farmers to abandon agricultural production, reducing food output and increasing scarcity. 4.2. High Agricultural Input Costs Despite FX rate stability, fertilizers, herbicides, pesticides, and farming equipment remain costly due to: Global supply chain disruptions. High import dependency. Transportation bottlenecks. For instance, a 50kg bag of fertilizer now costs over ₦45,000, up from ₦18,000 two years ago. This raises the cost per hectare of production, which is passed on to consumers. 4.3. High Transportation and Logistics Costs Fuel prices, driven by deregulated PMS pricing, now exceed ₦800–₦1,000 per litre in many parts of Nigeria. This disproportionately affects the food sector, as perishable goods require quick and safe transportation, often across long distances with poor road infrastructure. 4.4. Lean Season and Climate Challenges From May to August, Nigeria enters the lean season, when stocks from the previous harvest are depleted and new crops are not yet ready. Additionally, irregular rainfall and climate-related flooding have damaged yields, especially in rice, maize, and vegetable farming. 4.5. Weak Storage and Distribution Systems Post-harvest losses in Nigeria are estimated to exceed 30% due to poor warehousing, lack of cold chains, and inadequate market infrastructure. This exacerbates the mismatch between supply and demand, especially in urban areas. 5. MPC Decision in Hindsight: A Strategic Pause Amid Persistent Inflation Following the publication of this analysis, the Central Bank of Nigeria’s Monetary Policy Committee (MPC) convened and resolved to maintain all existing monetary parameters. This decision confirmed the forecasted trajectory, and in hindsight, reflects a calculated move to observe the lagging effects of aggressive monetary tightening already undertaken. The MPC held the Monetary Policy Rate (MPR) steady at 27.50%, retained the Cash Reserve Ratio (CRR) at 50%, maintained the asymmetric corridor at +500/-100 basis points, and left the Liquidity Ratio unchanged at 30%. This unanimous hold signals a pause-and-assess stance, which carries several implications for the broader economy. 5.1. Monetary Policy Rate (MPR) Held at 27.50% By leaving the MPR unchanged, the CBN has signaled that it is confident in the disinflationary trend of headline inflation, but remains cautious about overtightening, especially given weak real sector growth and persistently high lending rates. The MPC appears to be allowing time for the effects of earlier hikes—cumulatively over 750 basis points since 2023—to filter through the economy. Implication: The hold
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CBN Cuts Interest Rate on 1-Year Nigerian Treasury Bills
The Central Bank of Nigeria (CBN) slashes the interest rate on one year treasury bills paper allotted to investors by seven basis points, detail from its midweek primary market auction result has revealed. At the main auction on Wednesday, the CBN offered bills worth N500.0 billion across standard maturities: 91-day, 182-day, and 364-day maturities to investors for subscriptions. The monetary authority opened 91-day bills worth N50 billion, 182-day bills worth N100 billion, and 364-day bills totaling N350 billion for investors’ subscription in competitive bids. Investors’ appetite remained strong as total subscriptions settled at N1.17 trillion, exceeding N500 billion worth of Nigerian Treasury bills that was offered by the CBN. The CBN allotted N615.8 billion worth of Treasury bills across standard maturities to investors at the main auction. Preference was given to investors that bid for one year bills, accounting for about 82% of the total allotment. CBN offered N50 billion worth of Nigerian Treasury bills with 91 days to maturity; investors staked N72.56 billion, while N71.67 billion was allotted. Also, CBN opened N100 billion worth of Nigerian Treasury Bills with 182 days tenor for sales. Total subscriptions came to N46.84 billion, while N41.13 billion was allotted to investors. For one year bills, the CBN offered N350 billion. The 1-year bills recorded N1.052 trillion in total subscription, while the CBN only sold N503 billion to investors. Stop rates for 91-day and 182-day bills were unchanged at 18% and 18.50%, respectively. However, the CBN slashed the spot rate for 364-day bills by 7 basis points to 19.56% from 19.63%. #CBN Cuts Interest Rate on 1-Year Nigerian Treasury Bills $17bn: Nigeria Positions as World Bank’s Largest Portfolio in Africa
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CBN retains MPR at 27.5%, keeps CRR at 50%, liquidity ratio at 30%
by Nairametrics The Central Bank of Nigeria (CBN) has voted to retain the Monetary Policy Rate (MPR) at 27.5%, following its 300th Monetary Policy Committee (MPC) meeting held in Abuja. This was disclosed by the apex bank’s Governor Olayemi Cardoso during the post-MPC press briefing on Tuesday. Key Monetary Policy Decisions: All 12 MPC members voted unanimously to maintain current policy rates, the CBN stated. The decision demonstrates the committee’s cautious approach to monetary management, as it continues to assess prevailing macroeconomic conditions and the effectiveness of recent tightening measures. The CBN highlighted the recent moderation in Nigeria’s inflation rate, which eased to 23.71% in April 2025 from 24.23% in March, according to the latest data from the National Bureau of Statistics (NBS). Experts’ projections Nairametrics had earlier predicted the CBN’s decision to retain the MPR at 27.5%. Mr. Olaitan S. Sunday, Managing Director of Rostrum Investment & Securities Ltd, earlier told Nairametrics that the decision aligns with expectations. “Holding the MPR at 27.5% will continue to support the naira, anchor inflation expectations, and bolster investor confidence in the Nigerian economy,” he said. David Adonri, Vice Chairman of the Board at Highcap Securities, emphasized that underlying structural issues may influence future policy. “The outcome of the next MPC meeting may not reflect moderating inflation because foreseen threats to the economy require a proactive response. Demand-side pressure remains too high compared to supply,” he noted. Afrinvest’s Head of Research, Damilare Asimiyu, similarly expects a hold, citing key cost-side improvements. “We forecast a moderate decline in May inflation, aided by relative exchange rate stability and the recent reduction in pump prices by Dangote Refinery from N835 to N825 per litre. This should modestly reduce business operating costs and improve household purchasing power,” the analyst said. What This Means for the Economy The CBN’s decision to hold rates steady signals its focus on maintaining price stability while cautiously supporting economic recovery. If inflation continues to moderate and the foreign exchange market stabilizes, the CBN may consider a more accommodative policy stance in the second half of the year. Market snapshot Ahead of the MPC meeting, Nairametrics reported that the naira appreciated slightly to N1,597/$1 at the official foreign exchange market on Monday, up from Friday’s closing rate of N1,599.01/$1 — a signal of investor optimism about the CBN’s ongoing stabilization efforts. The next MPC meeting is scheduled for 21-22 July 2025.
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CBN retains Nigeria’s interest rate at 27.50% amid inflation drop
The Central Bank of Nigeria Monetary Policy Committee has retained the country’s interest rate at 27.50 percent in January, the same rate as in November last year amid inflation drops. It also retained the Cash Reserve Ratio, CRR at 50 basis points and the liquidity ratio, LR, at 30 percent and the asymmetric corridor at +500/-100 basis points around the MPR; other monetary policy decisions were retained. CBN Governor, Olayemi Cardoso disclosed this in a press briefing on Thursday after 299th MPC in Abuja. The apex bank boss explained that the rate pause was necessary following the recent inflation decline, which dropped to 24.48 percent in January after the Consumer Price Index rebase. “The members of the MPC unanimously agreed to retain the interest rate at 27.50 percent” he stated. DAILY POST reports that this is the first pause in interest rate hikes since Cardoso took office in September 2023. This comes as economists and financial experts have, in the last months, called for an interest rate pause. The Centre for the Promotion of Private Enterprise has been championing a call for a pause in the nation’s interest rate hike. Recall that on Tuesday, National Bureau of Statistics announced that Nigeria’s headline and food inflation rate dropped to 24.48 percent and 26.08 percent in January from 34.80 percent and 39.93 percent in December last year.
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New ATM transaction fees begin March 1, says CBN
The Central Bank of Nigeria (CBN) has reviewed upwards the fees charged on Automated Teller Machine (ATM) withdrawals effective March 1. In a circular, CBN Acting Director, Financial Policy & Regulation Department, John Onojah, explained that the revised charges will address increasing operational costs and enhance the efficiency of banking services. Under the new rules, customers withdrawing from their own bank’s ATMs (on-us transactions) will continue to enjoy free withdrawals. However, withdrawals from on-site ATMs (ATMs located at bank branches) will incur an N100 fee per N20,000 withdrawn. For withdrawals at ATMs belonging to other banks (Not-on-Us transactions), an N100 fee plus a surcharge of not more than N500 per N20,000 withdrawal will apply. The CBN emphasized that the surcharge is the income of the “ATM deployer/acquirer and must be disclosed to consumers at the point of withdrawal.” According to the CBN, the updated fees are in line with Section 10.7 of the ‘CBN Guide to Charges by Banks, Other Financial and Non-Bank Financial Institutions (2020).’ The statement reads, “In response to rising costs and the need to improve the efficiency of Automated Teller Machine (ATM) services in the banking industry, the Central Bank of Nigeria (CBN) has reviewed the ATM transaction fees prescribed in Section 10.7 of the extant CBN Guide to Charges by Banks, Other Financial and Non-Bank Financial Institutions, 2020 (the Guide).” “This review is expected to accelerate the deployment of ATMs and ensure that appropriate charges are applied by financial institutions to consumers of the service,” the CBN added. For international withdrawals using debit or credit cards, banks, and financial institutions are now allowed to charge a “cost-recovery charge equivalent to the exact amount charged by the international acquirer.” Additionally, the CBN stated that the three free monthly withdrawals for Remote-On-Us (other bank’s customers/Not-On-Us consumers) will no longer apply under Section 10.6.2 of the Guide. The apex bank has urged all financial institutions to ensure compliance with the new guidelines before the March 1, implementation date.
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CBN Unveils Nigerian FX Code to Guide Market Participants, Curb Distortions, Others
James Emejo from Thisday in Abuja The Central Bank of Nigeria (CBN) has approved the release of the Nigerian Foreign Exchange (FX) Code as a guideline to the banking industry to promote ethical conduct of Authorised Dealers in the Nigerian FX market. In a notice posted on its website yesterday, the apex bank further announced that the code would be formally launch on January 28, 2025, in Abuja. In October 2024, the central bank announced the introduction of the Electronic Foreign Exchange Matching System (EFEMS), for Foreign Exchange (FX) transactions in the Nigerian Foreign Exchange Market (NFEM). The new system was to be implemented not later than December 01, 2024, and preceded by a two-week test run in November. The system seeks to enhance governance, and transparency and facilitate a market-driven exchange rate that will be accessible to the public. The CBN further explained that the platform would further reduce speculative activities, eliminate market distortions and give the CBN improved oversight capabilities to effectively regulate the market. The bank noted that authorised dealers would subsequently conduct all FX transactions in the interbank FX market on the EFEMS approved by the apex bank where transactions will be reflected immediately. Authorised dealers were, therefore, required to comply with extant guidelines and regulations governing the FX market and ensure that all necessary documentation, training, and systems integrations were concluded ahead of the go-live date. The central bank added that it would publish real-time prices and buy/sell orders data from the system, and in collaboration with the Financial Markets Dealers Association (FMDA), publish the rules for the EFEMS. The Nigerian FX Code and revised Market Operating Guidelines for the Nigeria Foreign Exchange Market will also provide guidance to market participants.
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