The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) kept the Monetary Policy Rate (MPR) unchanged at 27.5% for the third consecutive period.
The MPC’s decision to maintain its policy stance was underpinned by the need to consolidate the disinflationary process and sufficiently contain price pressures.
Additionally, the Committee retained all other parameters – Cash Reserve Requirement (CRR) for Deposit Money Banks (DMBs) and Merchant Banks at 50.0% and 16.0%, respectively; the asymmetric corridor around the MPR at +500bps/-100bps and the liquidity ratio at 30.0%.
On Domestic Growth: The Committee acknowledged the slow but positive growth recorded in Q1-25 (3.13% y/y vs Q4-24: 3.76% y/y | Q1-24: 2.27% y/y), reflecting a moderation in growth across the oil and non-oil sectors from the previous quarter.
On Inflation: The MPC also acknowledged the sustained moderation in headline inflation (-76bps to 22.22% y/y) in June, driven by a decline in energy prices and stability in the naira.
However, it noted the increase in the month-on-month headline inflation (+1.68% vs May: 1.53% m/m), indicating persistent underlying inflationary pressures.
On the External Sector: The MPC noted the sustained stability of the naira, underpinned by increased capital flows, improved oil earnings following the increase in crude oil production, higher non-oil exports and a significant decline in overall imports.
According to the CBN, the FX reserves rose to USD40.11 billion as of July 18th, representing c. 9.5 months of goods import cover.
On Global Developments: The Committee highlighted the persistent global uncertainties, primarily associated with heightened trade tensions and geopolitical rifts.
The MPC stated that the increased global pressures may likely disrupt the global supply chain and could potentially push up prices of imported items in the domestic economy.
The Committee also pointed out the slowdown in the disinflationary trend in advanced economies, which has prompted central banks to adopt a cautious stance due to the unabating upside risks to inflation.
