Nigeria's Central Bank has unanimously decided to keep its benchmark interest rate unchanged at 27.50% for the second consecutive time, as announced by Governor Olayemi Cardoso following the Monetary Policy Committee's (MPC) 300th meeting in Abuja on Tuesday.

The decision maintains current monetary policy settings after six rate hikes implemented last year. The committee also retained the cash reserve ratio at 50% and liquidity ratio at 30%.

Cardoso cited "relative improvements in key macroeconomic indicators" that should support moderation in prices in the medium term. These positive indicators include a narrowing gap between official foreign exchange and bureau de change markets, a favorable balance of payments position, and easing fuel prices.

The committee particularly noted progress in addressing food inflation, commending government efforts to increase food supply and improve security in farming communities. "The members noted with satisfaction the progressive moderation in food inflation and, therefore, commended the government for implementing measures to increase food supply, as well as stepping up the fight against insecurity," Cardoso stated.

However, persistent inflationary pressures remain a concern, primarily driven by high electricity prices and continued foreign exchange demands. After reaching 28-year highs last year following President Bola Tinubu's economic policies—including ending subsidies and devaluing the naira—inflation has shown some improvement. Following a rebasing of the inflation basket, annual inflation dropped significantly from 34.80% in December to 24.48% in January, with a slight decline in April after an increase in March.

The MPC acknowledged new government policies designed to boost domestic production and reduce foreign currency demand pressures. Given the relative stability in the foreign exchange market, the committee urged the bank to continue implementing ongoing reforms to further build market confidence.

Cardoso also reported positive news regarding foreign reserves, which increased by 2.85% to $38.90 billion as of May 16, 2025, up from $37.82 billion at the end of March. This represents an import cover of six months for goods and services. Additionally, Nigeria's balance of payments recorded a surplus of $1.10 billion in Q4 2024, though this was down from $4.21 billion in the previous quarter.

The central bank governor expressed concerns about recent drops in crude oil prices and uncertainties related to U.S. trade policy, which could create new challenges for Nigeria's oil-dependent economy and budget execution.

Razia Khan, chief economist for Africa and Middle East at Standard Chartered Bank, noted the rate hold was "largely expected," adding that while little forward guidance was provided, "the Central Bank of Nigeria notably expressed a quiet confidence that it was doing the right thing. Naira stability is testament to this."​​​​​​​​​​​​​​​​