At its July 2025 meeting, the Monetary Policy Committee (MPC) of the Central Bank of Nigeria unanimously voted to maintain all key monetary policy parameters, reaffirming its commitment to anchoring inflation expectations. The Monetary Policy Rate (MPR) was held steady at 27.5%, with the asymmetric corridor remaining at +500/-100 basis points. The Cash Reserve Ratio (CRR) remained unchanged at 50% for Deposit Money Banks and 16% for Merchant Banks, while the Liquidity Ratio was also retained at 30%.
The MPC’s decision reflects the Committee’s determination to sustain the disinflationary momentum observed in recent months while preserving overall macroeconomic stability. Although headline inflation eased for the third consecutive month in June, declining to 22.22% from 22.97% in May, the MPC remains concerned about persistent underlying pressures, as both core and food inflation rose to 22.76% and 21.97% respectively. Month-on-month inflation also accelerated, rising to 1.68% in June from 1.53% in May. The committee also flagged continued risks from rising global uncertainties, including the potential impact of tariff disputes and geopolitical tensions on global supply chains and imported inflation.
The Committee acknowledged positive developments in Nigeria’s external sector. Improved capital inflows, higher crude oil production, stronger non-oil export performance, and a decline in import volumes have all contributed to strengthening the balance of payments and easing exchange rate pressures. At the NFEM window, the Naira has been relatively stable, hovering between N1,518.89/$ and N1,535.24/$ in the last month.
Market Impact and Outlook
The decision to hold rates is expected to slow the pace of yield declines in the fixed income market, as investors reassess expectations around future monetary easing and inflation dynamics. Recent auctions have seen steady drops in Nigerian Treasury Bill yields, with the 364-day tenor falling to 18.84% from 19.63% last month. With policy rates unchanged, further yield compression may be more gradual in the near term.
In the foreign exchange market, the MPC’s stance supports sustained Naira stability, bolstered by improving FX inflows and reduced import demand. Nevertheless, sustained Naira stability remains tied to factors such as global oil prices and domestic production performance.
Conclusion
The outcome of the July 2025 MPC meeting underscores the Central Bank’s data- dependent approach, prioritizing inflation containment over early policy loosening. While headline inflation has started to moderate, lingering structural and cost-push pressures suggest the path to price stability remains fragile. For now, the MPC is likely to maintain
its hawkish bias until inflation decelerates more broadly and sustainably. As the second half of the year unfolds, policymakers will remain vigilant, closely monitoring inflation dynamics, currency movements, and evolving global conditions before making further adjustments to the policy stance