CBN Keeps MPR at 27.5% in May 2025 – What It Means for Inflation and Lending

CBN Holds the Line: MPR Stays at 27.5% as Nigeria Battles Stubborn Inflation

The Central Bank of Nigeria (CBN) has just wrapped up its May 2025 Monetary Policy Committee (MPC) meeting and the headline?

No changes. No surprises. No breathing room.

MPR stays at 27.5%
Cash Reserve Ratio (CRR) holds at 45% for commercial banks, 14% for merchant banks
Liquidity Ratio remains at 30%

Here’s what it all means and why it matters more than ever in a fragile macroeconomic landscape.

What the CBN Said vs What the Market Heard

CBN Governor Olayemi Cardoso reaffirmed the apex bank’s hawkish stance, citing:

• Persistent inflationary pressure
• Exchange rate volatility
• Need to anchor investor confidence and curb excess liquidity

Translation?

“We’re not out of the woods yet. Hold the monetary brakes and pray the fiscal side catches up.”

Why the Hold Makes (Some) Sense

• Raising rates further might choke off credit to already struggling SMEs
• Cutting rates could send the naira into another tailspin
• CBN is choosing to stabilize, not stimulate

In short, it’s a “watch-and-wait” strategy while still tightening the screws.

What This Means for You

Whether you’re a business owner, investor, or borrower, here’s what the policy hold signals:

Risk of Doing Nothing?

While holding the line offers temporary stability, inflation continues to erode purchasing power, and growth remains sluggish.

It’s a classic CBN dilemma: Tighten too hard, you kill growth. Loosen too early, you fuel inflation.

With GDP growth projected at just 2.9% in 2025, Nigeria can’t afford to be indecisive for long.

Financial Juggernut Insight

Nigeria’s inflation isn’t just a monetary problem. It’s a structural one, energy shocks, food scarcity, forex illiquidity, and fiscal gaps all on the line.

Monetary policy alone won’t fix that. But for now, the CBN is saying:

“We’re staying the course… until something else breaks.”