The Central Bank of Nigeria (CBN) has announced its decision to retain the Monetary Policy Rate (MPR) at 27.5 percent, citing global economic uncertainties, including the ongoing trade war, as key factors influencing the decision. CBN Governor, Mr. Olayemi Cardoso, made this known at the conclusion of the 300th Monetary Policy Committee (MPC) meeting held at the banks headquarters in Abuja. The Committee was unanimous in its decision to hold policy, and thus decided as follows: Retain the NPR at 27.50%; Retain the asymmetric corridor around the NPR at plus 500 to minus 100 basis points; Retain the Cash Reserve Ratio of deposit money banks at 50% and that of merchant banks at 16%; and Retain the liquidity ratio at 30%, Cardoso stated. Explaining the rationale behind the decision, Cardoso noted improvements in certain macroeconomic indicators, which the Committee believes could support price stability in the near to medium term. The MPC noted the relative improvements in some key macroeconomic indicators, which are expected to support the overall moderation in prices in the near to medium term, he said. These include the progressive narrowing of the gap between the Nigeria Foreign Exchange Market and Bureau de Change BDC windows, the positive balance of payments position, and easing price of PMS. Despite these positive signs, Cardoso said the decision to maintain the policy rate was informed by the continuing global shocks and an uncertain policy environment. On the strength of these considerations, and driven by the continued uncertain policy environment exacerbated by ongoing global shocks, members weighed the available policy more comfortable, he said. Cardoso highlighted government efforts to improve food supply and combat insecurity in farming areas, pointing to a gradual moderation in food inflation. He urged security agencies to sustain their momentum and called on the government to continue providing necessary inputs to farmers to boost production. However, he acknowledged that inflationary pressures remain, citing high electricity costs, sustained demand for foreign exchange, and longstanding structural challenges. Underlying inflationary pressures are driven largely by high electricity prices, persistent foreign exchange demand pressure, and other legacy structural factors, he noted. The CBN Governor also used the opportunity to call on the fiscal authorities to strengthen initiatives aimed at increasing foreign exchange earnings from oil, gas, and non-oil exports. The committee also called on the fiscal authority to strengthen current efforts at enhancing foreign exchange earnings, especially from gas, oil, and non-oil exports, he said. He suggested that Nigerias refinery output could play a crucial role in achieving this goal. This could be achieved by encouraging Dangote Refinery and similar refineries in the country to increase their outputs, with aim to supply petroleum products to the countries in the Sub-Region. Cardoso further expressed concern over declining oil prices in the international market, warning that it could hamper the implementation of the federal governments 2025 budget. The MPC, however, expressed concerns about the recent decline in crude oil prices attributable to increased production by non-OPEC members, as well as uncertainties associated with U.S. trade policy, which present new challenges for fiscal receipts and budget implementation, he said.
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