The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) held its 303rd meeting on November 24 and 25, 2025. The Committee reviewed key developments in the global and domestic economies, including the risks to the outlook. All twelve (12) members of the Committee were in attendance.
Decision of the MPC
The Committee decided, by a majority vote, to maintain the current monetary policy stance with an adjustment to the corridor as follows:
Retain the Monetary Policy Rate (MPR) at 27.0 per cent.
Adjust the Standing Facility corridor around the MPR to +50 / -450 basis points.
Retain the Cash Reserve Requirement (CRR) as follows:
Deposit Money Banks: 45.00%
Merchant Banks: 16.00%
Non-TSA public sector deposits: 75.00%
Keep the Liquidity Ratio unchanged at 30.00 per cent.
The Committee’s decision was underpinned by the need to sustain progress made so far toward achieving low and stable inflation. The MPC reaffirmed its commitment to a data-driven assessment of developments and outlook to guide future policy decisions.
MONETARY POLICY COMMUNIQUÉ NO. 160
Considerations
The Committee welcomed the continued deceleration in headline inflation (year-on-year) in October 2025, marking the 7th consecutive month of decline. This favourable development resulted from several factors, including sustained monetary policy tightening, stable exchange rate, increased capital inflows, and surplus current account balance. Relative stability in the price of Premium Motor Spirit (PMS) and improved food supply also supported the pace of disinflation. However, headline inflation remains high at double digits, requiring sustained efforts to moderate it further.
The Committee noted that the steady deceleration across headline, core, and food inflation in October 2025 suggests that the lagged impact of earlier tightening measures will continue in the near term. Thus, maintaining the current stance amidst global uncertainties would allow previous policy rate hikes to fully transmit to the real economy and help reduce prices.
Members highlighted the strong performance of the external sector, evidenced by the surplus current account balance and steady accretion to external reserves, which have supported exchange rate stability and moderated inflation. The MPC also commended the collaboration between fiscal and monetary authorities, which contributed to the recent upgrade of Nigeria’s sovereign credit rating by major rating agencies and the delisting from the FATF grey list. These improvements are expected to boost investor confidence and enhance capital flows.
The Committee noted the sustained resilience of the banking system, with most financial soundness indicators within regulatory thresholds. Members acknowledged substantial progress in the ongoing recapitalization programme, with sixteen (16) banks now fully compliant with revised capital requirements. The Committee urged the Bank to ensure successful implementation and conclusion of the programme.
Price and Other Domestic Developments
Headline inflation (year-on-year) declined to 16.05% in October 2025 from 18.02% in September, driven by moderations in both food and core inflation.
Food inflation fell sharply to 13.12% in October 2025 from 16.87% in September, supported by improved domestic food supply, stable exchange rate, and base effects.
Core inflation declined to 18.69% in October 2025 from 19.53% in September, largely due to a decrease in the cost of furnishing and household maintenance.
Real Gross Domestic Product (GDP) growth remained positive, with 4.23% year-on-year growth in Q2 2025, compared with 3.13% in Q1 2025. The Purchasing Manager’s Index (PMI) rose significantly to 56.4 points in November 2025—the highest in five years—indicating improved growth prospects for Q3 and Q4 2025.
Gross external reserves increased by 9.19%, rising to US$46.70 billion as of November 14, 2025, from US$42.77 billion at end-September 2025, providing 10.3 months of import cover.
Global Developments
Global output is projected to recover in the near to medium term, supported by improved trade negotiations, accommodative monetary policy in Advanced Economies, and easing geopolitical tensions. However, risks remain, including rising protectionism, geoeconomic fragmentation, and potential renewed trade tensions between the United States and major trading partners.
Global inflation is expected to continue its downward trajectory through 2026 due to past monetary tightening, improved supply chains, and softening commodity prices, though it is projected to remain above pre-pandemic levels.
Outlook
The MPC forecasts sustained disinflation in the near term, driven by the lagged impact of previous monetary tightening and continued stability in the foreign exchange market. Ongoing seasonal harvests are expected to boost local food supply and further moderate food prices.
The Committee reaffirmed its commitment to an evidence-based policy approach to achieve price and financial system stability.
Related Posts