The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN), on Tuesday, July 22, 2025, after reviewing the recent economic and financial developments as well as assessing the risks to the outlook for 2025, declared that the nation’s economy is on a growth trajectory.
CBN Governor, Mr Olayemi Cardoso, who Chaired the 301st Meeting of the Committee in Abuja, said with the Real Gross Domestic Product (GDP) growth rate of 3.13% in the first quarter of 2025, and recent data on the Purchasing Managers Index (PMI) of 51.6, Nigeria’s economy remains on an expansionary path.
He also disclosed that the external sector also remains stable and resilient despite persisting uncertainties in the global macroeconomic environment.
Cardoso said the MPC also noted the sustained stability in the foreign exchange market, accentuated by improved capital flows, earnings from increased crude oil production, rising non-oil exports and significant reduction in aggregate imports.
According to him, gross external reserves rose to US$40.11 billion on July 18, 2025, representing about 9.5 months of import cover for goods, while global output recovery continues at a gradual pace.
However, he revealed that the recent developments, especially the persistent tariff war and geopolitical tensions, may continue to disrupt supply chains and exert upward pressure on the prices of imports.
MPC DECISION
Despite the steep growth trajectory, the apex bank governor said the Committee decided to maintain the current monetary policy stance and hold all policy parameters constant.
Cardoso disclosed that all the twelve (12) members of the Committee were in attendance at the meeting and voted to: Retain the Monetary Policy Rate (MPR) at 27.50%, Maintain the asymmetric corridor around the MPR at +500/-100 basis points, Retain the Cash Reserve Ratio (CRR) for Deposit Money Banks at 50.00 per cent and for Merchant Banks at 16.00%, and Keep the Liquidity Ratio unchanged at 30.00%.
He explained that the decision was premised on the need to sustain the momentum of disinflation and sufficiently contain price pressures. Arguing that maintaining the current policy stance would continue to address the existing and emerging inflationary pressure.
The governor assured that the MPC would continue to undertake rigorous assessment of economic conditions, price development and outlook to inform future policy decisions.
MPC CONSIDERATIONS
Speaking on the Committee’s considerations, Mr Cardoso said the Committee acknowledged the decline in headline inflation in June 2025, the third consecutive month of deceleration, which according to him, was largely driven by the moderation in energy prices and stability in the foreign exchange market.
Despite these positive developments, he said Members observed the uptick in month-on-month headline inflation, suggesting the persistence of underlying price pressures. Noting that the continued global uncertainties associated with the tariff wars and geopolitical tensions could further exacerbate supply chain disruption and exert pressure on the prices of imported items.
According to him, the Committee also noted the increase in Food inflation (year-on-year), to 21.97 per cent in June 2025 from 21.14 per cent in May, attributable to the increase in the cost of processed food. Core inflation, that is, all items less farm produce and energy, also increased to 22.76 per cent in June 2025 from 22.28 per cent in May, reflecting an uptick in the cost of Information & Communication, Housing & Utilities, and Personal care & Social services.
On a month-on-month basis, headline inflation rose to 1.68 per cent from 1.53 per cent, largely due to increases in the price of services and imported food.
While stating that the Committee acknowledged the efforts of the Federal Government in improving security and its impact on food production, Cardoso said Members urged the government to continue its support towards timely provision of high-yield seedlings, fertilizers, and other critical inputs for the current farming season.
He said the Members also noted the continued stability in the banking system, evidenced by the stable Financial Soundness Indicators (FSIs) which would further be supported by the on-going banking recapitalisation exercise. Disclosing that eight (8) banks have fully met the recapitalisation requirements, while others are making progress towards meeting the deadline.
The Committee thus, urged the Management of the Bank to sustain its oversight of the banking system to ensure continued resilience, safety and soundness of the financial system.
MOVING FORWARD
Moving forward, he said disinflation in the Advanced Economies has slowed, prompting major central banks to be cautious of upside risks to inflation.
He said in the Emerging Markets, central banks continue to calibrate monetary policy to their domestic conditions, noting the persisting risks to inflationary pressures.
The governor said the Outlook Staff projections indicate a further decline in inflation in the coming months, underpinned by the current tight monetary policy stance, stable exchange rate, declining PMS prices, and moderation in food prices as the harvest season approaches.
He said given the persistent uncertainty in the policy environment and underlying price pressures, monetary policy would need to maintain its current stance until risks to inflation recede sufficiently.
