CBN Maintains Tight Monetary Policy to Curb Inflation and Stabilize Naira
The Central Bank of Nigeria (CBN) has kept its benchmark interest rate unchanged at 27.50%, Governor Olayemi Cardoso announced on Thursday. The decision comes after a series of six rate hikes in 2024, totaling 875 basis points, as part of efforts to tame inflation and stabilize the naira.
Since 2022, the CBN has raised rates by a cumulative 16 percentage points, responding to decades-high inflation and a 70% depreciation of the naira following currency reforms in 2023. The tightening policy is beginning to show results, with the naira now trading within a narrow range of 1,470 to 1,550 per dollar since December 2024.
Inflation and Economic Outlook
Nigeria’s National Bureau of Statistics (NBS) recently reported an adjusted annual inflation rate of 24.48% for January 2025 after a Consumer Price Index (CPI) rebasing exercise. The recalibration updated the weighting of items in the inflation basket to better reflect current spending patterns.
Governor Cardoso emphasized that controlling inflation remains a top priority for the CBN as the country navigates economic uncertainty. High inflation has significantly impacted businesses and households, making price stability a key focus for policymakers.
What’s Next for Nigeria’s Monetary Policy?
With the next Monetary Policy Committee (MPC) meeting scheduled for May 2025, investors will closely monitor whether the CBN maintains its tight stance or eases monetary policy if inflation slows further.
As Nigeria continues its economic reforms, the central bank’s approach will play a crucial role in shaping market confidence, investment decisions, and currency stability in the coming months.
