Analysts say policy retention supports stability as Nigeria approaches a volatile pre-election cycle
By Taiye Olayemi
Lagos, Nov. 27, 2025 (NAN) — Some economists have welcomed the Central Bank of Nigeria’s (CBN) decision to retain the Monetary Policy Rate (MPR) at 27 per cent, describing the stance as timely, prudent, and necessary to preserve stability in the face of persistent inflationary pressures.
They spoke in separate interviews with the News Agency of Nigeria (NAN) on Thursday following the conclusion of the 303rd Monetary Policy Committee (MPC) meeting held in Abuja.
The MPC maintained that keeping the key policy rate unchanged reflected the need to stabilise monetary conditions while closely monitoring emerging risks from both domestic and global economic environments.
In addition to retaining the benchmark rate, the committee also held the Cash Reserve Ratio (CRR) at 45 per cent for commercial banks and 16 per cent for merchant banks, citing the continued importance of strong liquidity management.
The 75 per cent CRR on non-TSA public sector deposits was also maintained to ensure discipline and strengthen controls over government-related funds. The liquidity ratio likewise remained unchanged at 30 per cent.
However, the Standing Facilities Corridor was revised to +50 and -450 basis points around the policy rate — a move analysts say is aimed at improving monetary transmission and enforcing more responsible lending behaviour within the financial system.
Investment banker Mr Tajudeen Olayinka said the adjustment of the corridor directly targeted banks to improve market responsiveness, noting that the structure would encourage lower lending rates to non-bank players and support broader economic activity.
According to him, the new 22.5 per cent Standing Deposit Facility (SDF) makes the CBN window more attractive for banks seeking short-term, risk-free placements.
He explained that the measure would allow market forces to moderate lending rates more sustainably, while reinforcing monetary stability.
Olayinka noted that the MPC remained cautious about the potential downside risks associated with lower interest rates, including pressure on foreign reserves, portfolio outflows, and exchange rate volatility.
He emphasised that insecurity and heightened global uncertainties required careful policy calibration.
“Retention of the CRR shows that excess liquidity remains a major concern for the apex bank. Maintaining the liquidity ratio supports overall financial stability in a tightening global environment,” he added.
Similarly, Mr Kebira Aruna, Managing Director of Globalview Capital Ltd., said the MPC’s stance aligned with the gradual decline in inflation recorded in recent months.
He said the committee acted with caution to avoid undermining recent gains in price stability, especially as the country approaches the 2026 pre-election year — a period historically associated with rising liquidity and inflationary pressures.
“It will be risky to keep reducing rates without caution, as 2026 is a pre-election year. In such periods, funds previously outside the system usually return and may fuel inflation if not properly managed,” he warned.
Aruna added that any future rate cuts should only be considered after inflation shows consistent moderation over at least one quarter.
Also speaking, Mr David Adonri, Vice President of Highcap Securities, described the MPC’s decision as both wise and necessary given Nigeria’s current economic challenges.
He said retaining the policy parameters would help maintain investor confidence while government continues to address structural constraints affecting growth and stability.
According to him, monetary policy cannot be eased further without risking renewed inflationary pressures and potential financial instability.
“With the present challenges, relaxing policy is not advisable. Retaining the current parameters helps protect investor trust and resist emerging threats,” he said.
Adonri stressed that close coordination between fiscal and monetary authorities would remain crucial for long-term stability and economic resilience.
(NAN) (www.nannews.ng)
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Godwin Okafor is the Publisher & CEO of Naija247news Media Group LLC, an independent investigative news platform delivering accurate, data-driven reporting on Nigerian and global politics, economy, finance, and business. Founded in October 2010, Naija247news specializes in developmental journalism, providing timely insights and analysis to readers across Nigeria and the diaspora.
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