Date: Thursday, 20 February 2025
Ref: CBN/MPC/COM/156/299
Attention: News Editors/Gentlemen of the Press

MONETARY POLICY RATE RETAINED AT 27.50 PER CENT

The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN)
held its 299th meeting on the 19th and 20th of February 2025 to review recent
economic and financial developments as well as assess the risks to the
outlook for 2025.
All twelve members of the Committee were in attendance.

Decisions of the MPC
The Committee was unanimous in its decision to hold all parameters and thus
decided as follows:
1. Retain the MPR at 27.50 per cent.
2. Retain the asymmetric corridor around the MPR at +500/-100 basis
points.
3. Retain the Cash Reserve Ratio of Deposit Money Banks at 50.00 per
cent and Merchant Banks at 16 per cent.
4. Retain the Liquidity Ratio at 30.00 per cent
Considerations
At this meeting, the Monetary Policy Committee noted with satisfaction
recent macroeconomic developments which are expected to positively
impact price dynamics in the near to medium term. These include the
stability in the foreign exchange market with the resultant appreciation of the
exchange rate and the gradual moderation in the price of Premium Motor
Spirit (PMS). Members, however, were not oblivious of the risk of persisting
inflationary pressures driven largely by food prices. The Committee noted the
recent rebasing of the Consumer Price Index (CPI) by the National Bureau of
Statistics (NBS) which reviewed the weights of items in the consumption

basket to reflect current consumption patterns. The Committee further noted
that as the Federal Government continues to improve security in food
producing communities, supported by other measures to enhance food
supply, food prices are expected to continue to moderate.

Members reiterated the benefits of increased collaboration between the
monetary and fiscal authorities, demonstrated at the recently concluded
Monetary Policy Forum organized by the Bank. The MPC thus urged the
continued strengthening of this collaboration to achieve the mutually
beneficial objectives of price stability and sustainable growth.
The Committee highlighted the benefits of the improvements in the external
sector to exchange rate stability, including the convergence of rates
between the Nigeria Foreign Exchange Market (NFEM) and the Bureau de
Change (BDC), and urged the Bank not to relent in its effort to boost market
liquidity. In this regard, the Committee acknowledged recent measures
introduced by the Bank, such as the Electronic Foreign Exchange Matching
System (B-Match) and the Nigeria Foreign Exchange Code, to foster
transparency, ethics and credibility in the market. The MPC is, thus, of the
view that following major policy measures undertaken by the monetary and
fiscal authorities, the flow of foreign direct and portfolio investments as well as
diaspora remittances are expected to increase as investor and stakeholder
confidence improves. Furthermore, the improvement in oil production, which
was 1.54 million barrels per day (mbpd) at the end-January 2025, will
enhance the current account position of the Balance of Payments with the
attendant positive impact on external reserves.
The MPC observed that despite pockets of macroeconomic headwinds
confronting the Nigerian economy, the banking system has remained robust
and resilient. Members, however, urged the Bank not to relent on its keen
surveillance of the banking system, especially at a time of significant
exogenous and endogenous headwinds. In addition, Members called on the
Management of the Bank to closely monitor the ongoing recapitalization of
the banking system to ensure the injection of quality capital as envisaged in
the framework.
Overall, the MPC acknowledged the various policies by the Bank, aimed at
anchoring inflation expectations, easing exchange rate pressures, deepening
financial inclusion, and improving the transmission mechanism of monetary
policy.
Key Developments in the Domestic and Global Economies
Data from the National Bureau of Statistics, using the 2009 base year, showed
that headline inflation (year-on-year) stood at 34.80 per cent in December

2024, compared with 34.60 per cent in November 2024. On a month-onmonth basis, it moderated to 2.66 per cent in December 2024, from 2.98 per
cent in the previous month. Both the food and core components remained
key contributors to headline inflation. Food inflation eased slightly to 39.84 per
cent in December 2024 from 39.93 per cent in November, while the core
component stood at 29.28 per cent in December 2024, compared with 28.75
per cent in November.
Following the rebasing exercise and revision of the weights of the
consumption basket, using a 2024 base year, headline inflation for January
2025, now stands at 24.48 per cent (year-on-year) while the food and core
components stood at 26.08 and 22.59 per cent respectively. In the view of
Members, the new base year and reconstituted consumption basket
represents the current economic realities.
Real GDP (year-on-year) grew by 3.46 per cent in the third quarter of 2024
compared with 3.19 and 2.54 per cent in the preceding and corresponding
periods, respectively. Both the Oil and Non-oil sectors contributed to the
growth, with the Services sector being the major driver. While the Non-oil
sector is expected to continue to lead output growth in the near term,
sustaining the increase in oil production will enhance the contribution of the
Oil sector to GDP growth.
The external reserves remained robust at US$39.4 billion as of 14th February
2025, translating to an import cover of 9.6 months for goods and services. In
addition to this, the Balance of Payments has remained strong with a positive
current account balance of US$6.06 billion as at the end of the third quarter
of 2024.
On the global scene, the war between Russia and Ukraine as well as the
uneasy calm in the Middle East remain key risks to the growth outlook. There
is, however, a glimmer of hope that resolutions may be at hand. In addition
to these legacy risks, the adoption of increased tariffs by the new US
administration against its trading partners and retaliatory tariffs may result in
elevated inflation and tempered growth in 2025. The IMF has, however,
maintained global growth projections for 2025 and 2026 at 3.3 per cent
apiece.
Members thus, agreed unanimously to continue to monitor both domestic
and global developments to identify emerging risks and propose appropriate
policy responses to mitigate the impact of associated shocks to the Nigerian
economy.
The next meeting of the Committee is scheduled to hold on the 19th and 20th
of May 2025.

Thank you.
Olayemi Cardoso
Governor,
Central Bank of Nigeria
20th February 2025

PERSONAL STATEMENTS BY
THE MONETARY POLICY COMMITTEE MEMBERS
MPC MEETING FEBRUARY 19 – 20, 2025

1. AKU PAULINE ODINKEMELU
I vote to retain the Monetary Policy Rate (MPR) at 27.50 per cent, the
asymmetric corridor around the MPR at +500/-100 basis points, Cash Reserve
Ratio of Deposit Money Banks at 50.00 per cent and Merchant Banks at 16
per cent, and the Liquidity Ratio at 30.00 per cent. My decision is influenced
by the following developments:
Global Economic Developments
The global economy has undergone significant changes since the MPC last
met in November 2024. Rising uncertainty in international trade, driven by
anticipated higher tariffs due to expected retaliatory trade policies against
the United States, and increased risk of trade fragmentation, are potentially
slowing global growth and posing greater challenges for developing
economies. Despite these headwinds, the global growth forecast remains
unchanged. According to the International Monetary Fund (IMF), global
growth stabilized at 3.2 per cent in 2024 and is expected to remain steady at
3.3 per cent in both 2025 and 2026. Ongoing geopolitical uncertainties —
including conflicts in the Middle East and the Russia-Ukraine war — as well as
increasing protectionism and trade fragmentation, continue to weigh on
economic prospects. Growth in the advanced economies is projected to
moderate from 1.9 per cent in 2024 to 1.8 per cent in 2025. The Emerging
Markets and Developing Economies (EMDEs) are expected to grow at 4.2 per
cent in 2025 and 2026. Sub-Saharan Africa’s growth outlook has been revised
upward from 3.8 per cent in 2024 to 4.2 per cent in 2025, reflecting improved
economic conditions in the region.
The IMF projects a gradual moderation in global inflation, forecasting a
decline from 5.7 per cent in 2024 to 4.2 per cent in 2025 and 3.5 per cent in
2026. This sustained moderation is driven primarily by easing supply chain
disruptions, anticipated declines in energy prices, and labour market
normalization. In the advanced economies, inflation is expected to move
closer to the long-term targets set by central banks, supported by subdued
energy prices, and relatively tight monetary policy. Inflation in these
economies is projected to decrease from 2.6 per cent in 2024 to 2.1 per cent
in 2025 and further to 2.0 per cent in 2026. In the EMDEs, it is expected to
moderate at a slower pace due to persistent challenges, prominent among
which are exchange rate pressures, inadequate transport infrastructure, and
energy shortages, which continue to pose upside risks. Inflation in the EMDEs is

projected to decline from 7.8 per cent in 2024 to 5.6 per cent in 2025 and 4.5
per cent in 2026.
I, therefore, vote to hold the policy interest rate while encouraging the Bank
to closely monitor the emerging risk from the global economy. I understand
the importance of effectively anchoring inflation expectation to ensure price
stability. However, the elevated risks to inflation are largely structural.
Domestic Economic Developments and Outlook
The domestic economy expanded by 3.46 per cent in the third quarter of
2024, up from 3.19 per cent in the second quarter, driven primarily by growth
in the services, industry, and agriculture sectors. Continued improvements in
agricultural output and crude oil production are expected to sustain the
positive trajectory. The slow pace of growth in non-oil sectors, subdued
consumer demand, elevated interest rates, and high consumer prices pose
significant risks to sustained economic expansion.
Year-on-Year headline inflation increased marginally to 34.80 per cent in
December 2024 from 34.60 per cent in the previous month. This slight increase
was primarily driven by heightened seasonal demand associated with yearend celebrations, as well as rising energy costs.
Other factors that weighed on my decision are as follows:
First is the need to monitor the outlook to domestic inflation, which is
projected to decline gradually due to improved economic stability,
exchange rate appreciation, relatively lower PMS prices, a hawkish monetary
policy stance, and enhanced security in food-producing regions. Secondly, it
is essential to monitor the behaviour of the rebased inflation rate. While some
scholars attribute the decline in the rebased inflation — from 34.8% in
December 2024 to 24.48% (year-on-year) in January 2025 — solely to
statistical adjustments, I take a more optimistic perspective, focusing on how
this recalibration helps identify the key drivers of current inflation in Nigeria.
The decision to rebase inflation from the 2009 base year to 2024 further
supports my longstanding argument that Nigeria’s inflation is largely structural.
I have consistently maintained that the country's persistent inflation stems
primarily from supply-side constraints in critical sectors such as agriculture,
infrastructure, and oil. The rebased inflation measure, which assigns greater
weight to core inflation, underscores this reality. Core inflation—driven by
transportation, housing, healthcare, and electricity costs — remains persistent
and is less responsive to monetary policy interventions. While I acknowledge
that food inflation serves as a key predictor of overall inflation, recalibrating
the inflation measure to place greater emphasis on core inflation more
accurately reflects the evolving structure of the Nigerian economy. This
approach effectively highlights the fundamental drivers of inflation.

In the light of these insights, the Central Bank of Nigeria should continue to
work on enhanced coordination with the fiscal authority to develop policies
that address supply-side shocks and mitigate structural inflationary pressures.

2. ALOYSIUS UCHE ORDU
Introduction: The February 2025 MPC meeting took place at a time when the
National Bureau of Statistics (NBS) released its rebased CPI, replacing the
2009 price reference period with 2024 as the base year. This milestone
provided an opportunity to reflect on the MPC’s journey in the past twelve
months. Looking back, 2024 was a particularly difficult year for Nigerians, with
record high inflation and severe naira depreciation. To tackle these problems
head on, the MPC showed exceptional courage by returning to monetary
policy orthodoxy – raised interest rates by 875 basis points and significantly
constrained money supply by raising the cash reserve ratio. CBN also
introduced reforms to the foreign exchange market, for example, the
electronic foreign exchange matching system, to enhance transparency and
improve operational efficiency in the foreign exchange market. Combined
with other fiscal and structural policies, these measures are yielding dividends
as reflected in CBN staff presentations of which the following are noteworthy.
Cautious
improvements
in
sentiments
and
expectations:
First,
staff
presentations indicate a broadly optimistic business outlook, with increased
confidence across sectors, particularly in industry and agriculture. Businesses
expect higher activity, employment growth, and an appreciating naira,
though challenges such as high interest rates, insecurity, and insufficient
power supply persist. Second, the Purchasing Managers’ Index (PMI)
recorded an expansion at 50.2 index points, reflecting growth in the industrial
and agricultural sectors, while services contracted due to declines in business
activity, new orders, and employment.
Third, on the consumer side, household confidence improved, though
sentiment remains cautious due to continued concerns about inflation.
Essential spending continues to dominate household expenditure, while
purchases of big-ticket items remain low.
Not surprisingly, inflation remains a major concern, with over 80% of businesses
and households perceiving it as high, driven by energy costs, exchange rates,
and transportation expenses. However, firms and households expect that
inflation will ease in the next six month on account of increased domestic
production of PMS from the Dangote, Port Harcourt and Warri refineries; the
increased production of crude oil to 1.8 million barrels per day; the increased
domestic production of food items with enhanced government efforts to
boost agricultural productivity; adjustments to food import policies; and the
recent re-basing of the CPI data by the NBS.
Growth in domestic output and business activity: The economy continued to
show resilience and recovery, with real GDP growth projected to reach 3.2%
in 2025, up from 3.1% in 2024 (IMF). Though marginal improvement in per

capita terms, this positive momentum is driven by strong performances in
agriculture, industry, and services sectors. In particular, the agriculture sector
has been a key driver of this growth, experiencing six consecutive months of
expansion. Similarly, the industrial sector is rebounding, benefiting from
improved energy supply, lower import costs, and new manufacturing
incentives, fostering increased production across key industries such as
textiles, cement, and consumer goods.
Strengthening of the naira and foreign exchange reserves: The naira
appreciated by 13.6% against the US dollar between November 2024 and
January 2025, reflecting improved foreign exchange inflows and effective
monetary policies. This appreciation is attributed to higher oil revenue,
increased remittances, and foreign investment inflows, as well as enhanced
exchange rate management by CBN. The foreign exchange market has
stabilized, providing greater confidence for businesses and consumers,
reducing import costs, and supporting domestic price stability.
Additionally,
Nigeria’s
external
reserves
remained
robust,
supporting
exchange rate stability and investor confidence. CBN’s continued efforts to
increase reserves through non-oil exports, diaspora remittances, and foreign
investment inflows have contributed to this positive trend. As a result, the
economy is better positioned to withstand external shocks, ensuring a more
resilient financial environment for businesses and consumers.
Stock market and investment growth: The Nigerian Stock Exchange (NGX) AllShare Index rose by 7% between October 2024 and January 2025, reflecting
strong investor confidence and increased participation in equity markets. The
banking, manufacturing, and consumer goods sectors recorded significant
gains, driven by improved corporate earnings, increased foreign investor
inflows, and positive economic outlook. This performance highlights growing
confidence in Nigeria’s economic trajectory, with more businesses accessing
capital markets for expansion.
In addition to stock market growth, foreign direct investment increased,
albeit modestly, particularly in technology, renewable energy, and
infrastructure projects. This is a result of ongoing economic reforms, improving
business climate, and government incentives aimed at attracting global
investors. Continued and much higher investment inflows will be necessary for
sustained economic recovery and growth and to transform Nigeria to a
trillion-dollar economy.
On fiscal policy: Staff presentations also highlighted positive revenue growth
and improved budget performance. The FGN recorded increased revenue
collection between January and August 2024, driven by higher oil prices,
improved tax collection, and stronger non-oil revenue mobilization. The

implementation of tax reforms and digital tax administration systems
contributed to enhanced revenue efficiency. Additionally, improved
compliance with value-added tax (VAT) and corporate income tax
regulations boosted government revenue. Intense drive will be necessary to
raise the overall tax revenue-to-GDP ratio well above 10 per cent.
On
the
expenditure
side,
the
government
prioritized
infrastructure
development, social programs, and debt servicing. Capital expenditure
focused on transportation, energy, and health projects, aimed at stimulating
economic growth and job creation. While debt servicing remained a
significant portion of government spending, efforts were made to enhance
debt sustainability through improved revenue generation and refinancing
strategies. The fiscal deficit, although still of concern, showed signs of
narrowing, indicating better fiscal discipline and expenditure management.
Looking ahead, it is vital that fiscal policy continues to emphasize revenue
mobilization, cost optimization, and sustainable borrowing practices. It is
commendable that the government aims to reduce reliance on oil revenues
by expanding non-oil revenue sources, including agriculture, manufacturing,
mining, and technology sectors. Fiscal consolidation efforts, including subsidy
reforms and public financial management improvements, are expected to
further enhance budget performance and overall economic stability. With
stronger revenue inflows and controlled expenditure growth, the fiscal
outlook for 2025 remains positive, supporting economic resilience and longterm fiscal sustainability.
Developments in the global economy: On January 29, the U.S. Federal
Reserve kept interest rates on hold at 4.25 – 4.5 per cent and signaled fewer
reductions than previously anticipated for the rest of the year. This hawkish
stance
reflects
uncertainties
about the new
administration’s
tariffs,
immigration, fiscal and regulatory policies and their implications for the U.S.
economy. Thus far, the economy has been resilient: Unemployment is
relatively low at 4.3 per cent, and consumer spending is healthy though
inflation remains elevated with a 3.0 per cent rise in the CPI in January 2025
vis-à-vis a year earlier. Stripping out volatile food and energy categories, core
inflation rose by 3.3 per cent for the year ending in January 2025. Similarly,
month-on-month consumer prices rose in January by 0.5 per cent, the highest
increase since August 2023.
The U.S. Fed is thus expected to maintain a hawkish stance by continuing to
pause further interest rate cuts while the economy is strong, and inflation
remains elevated. That U.S. interest rates will stay higher for longer marks the
end of an era of some of the sharpest and most synchronized monetary
policy tightening in advanced countries.

In contrast, other advanced countries are cutting interest rates. On January
30, the European Central Bank lowered interest rates by 25 basis points – a
decision that reflects confidence that inflation will return to the 2.0 %
medium-term target despite persistent domestic inflationary pressures driven
by wage adjustments. While monetary policy remains restrictive, recent rate
cuts are gradually easing borrowing costs, though financing conditions
remain tight due to past rate hikes still impacting credit markets. The Bank of
England and the Bank of Canada also cut their rates. At 49.1 index points,
China’s purchasing managers’ index was below forecasts and marked the
first contraction since September 2024, reflecting weaker external demands.
This outcome will add further pressure on China’s policy makers already
challenged by property market slowdown, a loss in consumer confidence
and the evident trade tensions with the U.S.
Implications of global developments for the Nigerian economy: Staff
presentations also highlighted that geopolitical tensions, global trade policies,
and inflationary pressures continue to shape Nigeria’s economic outlook. The
ongoing tariff escalation between the U.S., China, and other major
economies has introduced greater volatility in global commodity markets,
affecting Nigeria’s trade balance. However, stabilizing oil prices and
increasing global demand for Nigerian crude have helped sustain foreign
exchange inflows and support economic growth projections for 2025.
That the U.S. appears to be abandoning the rules-based international order
that has assured stability, open markets and global growth in the past
decades has serious consequences for emerging markets and developing
economies. Already, the World Bank’s January 2025 Global Economic
Prospects noted that living standards in emerging markets and developing
economies will lag further behind the advanced countries in the period
ahead.
Monetary policy shifts in advanced economies, particularly the U.S. Federal
Reserve and the European Central Bank, clearly have direct implications for
Nigeria. The delayed pace of interest rate cuts in the U.S. has influenced
global financial markets, affecting capital flows to emerging markets like
Nigeria. As global investors seek higher returns, some have shifted away from
emerging markets, leading to capital outflows and exchange rate pressures
on the naira. However, the naira’s recent appreciation and CBN’s foreign
exchange management strategies have helped stabilize the financial
markets, mitigating some of these risks.
Despite external headwinds, Nigeria’s economic resilience is supported by
structural reforms and policy adjustments. The government’s focus on
diversifying revenue sources beyond oil, boosting domestic production, and

improving infrastructure investment is expected to cushion the economy
against external shocks. The gradual easing of global inflation and increased
foreign investment into non-oil sectors present opportunities for sustained
growth. Continued monitoring of global developments, proactive monetary
and fiscal policies, and structural reforms will be critical to ensuring long-term
economic stability and competitiveness in the face of evolving global
challenges.
Concluding remarks and rationale for my vote: Nigeria commenced 2025 on
a brighter note than 2024. But we are not out of the woods yet. The lesson
from global experience is that one of the worst mistakes we can make is to
tolerate sustained and rising inflation. Indeed, the necessary condition for
maximum sustainable economic growth is stable prices. As such, I continue to
see a persuasive case for the MPC to stick to its script, for now, and keep
interest rates on hold. This is the first time to do so in the past seven meetings.
We will closely monitor developments in the period ahead and make
decisions as appropriate based on the available data. I therefore voted to
hold the MPR, the CRR, liquidity ratio, and the asymmetric corridor at their
current rates.

3. BALA MOH’D BELLO MoN
Opening Statement
At the February 2025 Monetary Policy Committee (MPC) meeting, the first in
the year, I voted to hold all parameters at their current levels as follows:
1. Retain the Monetary Policy Rate (MPR) at 27.50 per cent.
2. Retain the asymmetric corridor around the MPR at +500/-100 basis
points.
3. Retain the Cash Reserve Ratio of Deposit Money Banks at 50.00 per
cent and Merchant Banks at 16 per cent.
4. Retain the Liquidity Ratio at 30.00 per cent.
The meeting, which was held approximately one year after the current MPC
commenced sitting, provided an opportunity to appraise the effectiveness of
the Committee’s policies on key macroeconomic indicators.
It is gratifying to note that previous policies of the Committee, complemented
by the Bank’s administrative policies and supportive fiscal initiatives, are
yielding positive outcomes, leading to the gradual restoration of domestic
macroeconomic stability. This is supported by recent statistics which show
continued moderation in inflation persistence, relative stability and
appreciation in the naira exchange rate, and a sustained positive output
performance.
I, also, evaluated current global developments with potential implications for
Nigeria’s macroeconomic performance, including shifts in international trade
patterns, geopolitical dynamics, and price developments. This robust analysis
and the short–to-medium term outlook for key macroeconomic indicators,
guided my decision at the meeting. Outlined in the ensuing sections, are my
reflections on specific economic indicators.
Key Considerations
A major high point of the meeting was the recent rebasing of the Consumer
Price Index (CPI) by the National Bureau of Statistics (NBS), which revised the
weights of items in the consumption basket to reflect current consumption
patterns. Following the rebasing exercise and revision of the weights of the
consumption basket, which adopted a 2024 base year, headline inflation for
January 2025 was reported as 24.48 per cent (year-on-year) with the food
and core components at 26.08 per cent and 22.59 per cent respectively. The
exercise conforms with global best practices, enhances data credibility and
ensures alignment with prevailing macroeconomic realities, for informed
policy decision-making.
At the current inflation level, real yields (MPR less headline inflation) are now
positive, a development that would boost investor confidence and enhance

the expectations of economic agents. Further moderation in domestic prices
is expected with the sustained coordination of monetary and fiscal policies.
Real Gross Domestic Product (GDP) grew by 3.46 per cent (year-on-year) in
the third quarter of 2024 compared with 3.19 per cent and 2.54 per cent in
the preceding and corresponding periods, respectively. Notably, the non-oil
sector was the major driver of GDP growth, a reflection of the importance of
ongoing efforts by the federal government at economic diversification for
sustainable and inclusive growth. The recent improvement in crude oil
production is a welcome development that is expected to further support
output expansion throughout the year. These positive trends provide the MPC
with greater latitude to focus on its core mandate of ensuring price and
financial system stability.
Against the backdrop of tight liquidity management and the recent
modification of the foreign exchange (FX) management strategy, the naira
exchange rate has demonstrated relative stability, with considerable
appreciation. The revised FX management strategy, which includes the
adoption of the Electronic Foreign Exchange Matching System (EFEMS) and
the Nigeria Foreign Exchange Code, to enhance transparency, ethics and
credibility in the market, is gradually yielding desired outcomes. A substantial
portion of FX demand has migrated to the official window, thus reducing
speculative demand and allowing market forces to play a more significant
role in exchange rate determination. As confidence in the revised framework
grows, the positive implications for domestic price stability are expected to
gradually unfold.
The banking sector has remained robust and stable. Reports presented at the
meeting indicate that prudential ratios are within regulatory thresholds, and
stress test results remain satisfactory despite the contractionary stance of
monetary policy. Nonetheless, the Bank remains vigilant with proactive
measures such as the ongoing recapitalization of commercial banks which is
crucial to ensuring continued stability amidst evolving global and domestic
economic conditions.
On the global front, downside risks remain elevated due to factors such as
escalating trade tensions, persistent conflicts in the Middle East and Ukraine,
and climate related shocks. On the contrary, there are also potential upside
risks to global economic developments such as stronger-than-expected
demand, particularly in the advanced economies, and China which could
boost global growth prospects.
Against this backdrop, the outlook for the global economy in 2025 remains
uncertain, and the projected stability is confronted with a complex mix of risk
factors. In addition, inflation in major advanced economies faces fresh

headwinds associated with the ongoing tariff wars and labour demand
issues. This may result in unanticipated monetary policy adjustments with
implications for emerging markets. In this context, therefore, continued
implementation of policies that reinforce Nigeria’s macroeconomic stability
remains a priority, to enhance resilience against external shocks.
Concluding Remarks
While I note the positive short-to-medium term outlook for the Nigerian
economy, it is imperative to sustain coordinated and orderly positive
measures to further strengthen macroeconomic fundamentals.
Overall, I am convinced that the primary objective of monetary policy at this
point would be to preserve and deepen the relative stability which the
economy is exhibiting. The current monetary policy configuration is suitable,
in my view, to support this goal, hence my decision to vote for a hold.

4. BANDELE A.G. AMOO
Having reviewed the recent empirical developments in both the domestic
and external economies, I decided to vote as follows:
(a) Retain the Monetary Policy Rate (MPR) at 27.50 per cent.
(b) Retain the asymmetric corridor around the MPR at +500/-100
basis points.
(c) Retain the Cash Reserve Ratio (CRR) at 50.0 per cent for Deposit
Money Banks (DMBs) and 16.0 per cent for Merchant Banks.
(d) Retain the Liquidity Ratio (LR) at 30.00 per cent.
The following consideration influenced my decision.
1. Global Growth and Inflation
The resilience witnessed in global economic recovery in the recent past
continued through February 2025. The IMF (World Economic Outlook, WEO)
however, predicted that global growth will likely remain flat at 3.3 per cent
apiece in 2025 and 2026 compared with 3.2 per cent in 2024. Output
expansion in the emerging market and developing economies (EMDEs) is
currently stable, with the current pace expected to continue over the short
term. However, the outlook is subject to downside risks, including the
dampening
effect
of
monetary
tightening
on
economic
activities,
resurgence of protectionism, and heightened geopolitical tensions.
Global average inflation continued to slide, giving rise to precipitating
monetary policy convergence amongst the advanced economies. The
downward trend is traceable to continued energy price decline, ease in
supply chain disruptions and other positive inflation expectations. A report by
the International Monetary Fund (World Economic Outlook, January 2025
update) forecasts global inflation to moderate from 5.7 per cent in 2024 to
4.2 and 3.5 per cent, in 2025 and 2026, respectively. The downside risks have,
however, persisted as escalating geopolitical tensions continue to further
disrupt commodity price declines, and increase fragmentation of trade
networks.
Also, global commodity prices exhibited minimal volatility lately, with forecast
of downward trajectory, especially in energy prices. Food inflation is
projected to decline further due to improved crop harvest by key producers
across several regions. Tighter supplies in the Russian Federation and mixed
winter crop conditions in parts of the European Union, Argentina and the US;
emerging trade wars; coupled with uncertainties from ongoing geopolitical
tensions in some regions, pose significant risk to the outlook.

Consequently, some central banks in emerging markets and advanced
economies continued to cut their policy rates as inflation moderates but
remain cautious to ensure achievement of their set targets. Others, however,
retain their restrictive stance as upside risks to inflation persist.
2. Domestic Economic Developments and Outlook
Information from the National Bureau of Statistics (NBS) showed that Nigeria’s
Gross Domestic Product (GDP) grew by 3.84% (year-on-year) in real terms in
the fourth quarter of 2024, compared with 3.46% recorded in the fourth
quarter of 2023. GDP performance in the fourth quarter of 2024 was driven
mainly by the Services sector, which recorded a growth of 5.37% and
contributed 57.38% to aggregate GDP. The growth of the industry sector was
2.00%, a decline from 3.86% in the fourth quarter of 2023. Agriculture sector
grew by 1.76%, from the growth of 2.10% in the fourth quarter of 2023. In terms
of share of the GDP, the services sector contributed more to aggregate GDP
in the fourth quarter of 2024 compared to the corresponding quarter of 2023.
The Nigerian Financial system continues to be resilient and strong. Banking
industry assets grew by12.68% to N17.98 trillion in January 2025. Industry credit
and deposits increased by N0.59 trillion and N11.05 trillion, respectively as of
January 2025 compared with their levels in the preceding year. Bank liquidity
remained adequate in January 2025, reflected by a high ratio of liquid assets
to third-party funds at 50.6%. The Capital Adequacy Ratio (CAR) declined to
14.8% in January 2025 from 15.2% in December 2024, thereby exposing banks
to more risk-weighted assets and under supporting credit growth, even as
interest margin to total operating income rose by 8%. Meanwhile, nonperforming loans (NPL), as a proxy of credit risk, stood at 4.2% in January 2025.
The financial soundness indicators (FSI) trend for other financial institutions also
showed strong safety levels. Their savings and domiciliary deposits fell by N
0.17 trillion (0.80%) and N 0.96 trillion (2.40%) respectively, in January 2025.
These Fintech-driven MFBs have played a key role in advancing the nation’s
financial inclusion drive and the growth of the MFB subsector. Through
technological innovation and the use of data analytics, these MFBs have
enabled faster and more efficient delivery of financial services to the
underbanked and unbanked.
The latest stress tests indicate banking industry resilience against various risks,
supported by efficient macro-prudential framework. Moving forward, the
CBN should continue strengthening synergy with other regulatory entities in
the financial sector to mitigate risks that could potentially disrupt financial
system stability.
Nigeria’s Balance of Payments (BOP) position remains stable to support
external sector stability. Portfolio inflows as at end-February 2025, remain

high, recording positive net inflows . The external reserves is estimated to be
about US$39,839.79million at end-February 2025, from US$38,706.99million at
end-January 2025, mainly, due to improved crude oil production and stability
in the FX market following several reforms by the CBN. Other factors include
expected reduction in import demand pressures arising from the full
deregulation of the downstream oil sector, reduced importation of petroleum
products , increased inflows and other newly introduced measures by the
CBN.
Data from the NBS reported that the rebased year-on-year headline inflation
for January 2025 was 24.48%, due to the reconstitution of the inflation basket
to reflect current consumption patterns as well as adoption of a new
methodology for computing the CPI. Food inflation stood at 26.08% while
core inflation stood at 22.59% in January 2025. Further analysis under the new
methodology showed that items such as health, housing utilities, information
& communication, recreation, education services, and insurance & financial
services recorded single-digit inflation rates.
A further breakdown of the inflation data shows that Food and NonAlcoholic beverages were the major drivers of both year-on-year and monthon-month Headline inflation, contributing 16.65 and 1.15%, respectively.
Opinion survey from the states showed that insecurity, production cost,
subsidy issues, energy challenges, exchange rate depreciation are the main
factors driving inflation in Nigeria. The marked decline in the inflation rate
after the re-basing exercise underscores a shift in real interest rates into
positive territory. This will improve investor sentiment for the Nigerian
economy, particularly within the corridor of fixed income instruments.
It is hoped that when the government facilitate the efficient implementation
of the 2023 Electricity Act to tackle electricity infrastructure deficit in Nigeria, it
will systematically moderate inflation further. Energy is a major component of
business costs, which could stimulate investment while also reducing
household electricity and gas expenses, increasing real disposable income
and potentially boosting demand for other goods and services. Lower energy
prices would help to fasten the disinflationary process, potentially facilitating
monetary policy easing, which may further support investment.
3.0 My Concern
I am glad to note that the Nigerian economy witnessed several positive
macro-economic developments in recent times across different sectors.
Some of which include: sector-wide drop in general prices, especially food;
stability in the foreign exchange market resulting in reduced speculative
activities, and continued appreciation of the naira against the US dollar;
declining FX premium between NFEM and BDC recently; gradual moderation

in the price of Premium Motor Spirit (PMS); planned recapitalisation of the
Bank of Agriculture; increase in social safety programmes to further boost
aggregate demand to reduce the manufacturers’ outcry of unsold stock of
goods; growth in the capital market (ASI and equity portfolios); improved
payment system infrastructure as well as improved coordination between the
fiscal and monetary policy authorities.
Given the aforementioned, it is my fervent believe that the MPC must
continue to contain demand-side pressures and manage the second-round
effect from supply shocks. I also submit that it is appropriate to maintain a
tight monetary policy stance until a significant and sustained decline in
inflation is achieved. Working with the MPC team, the duration and extent of
policy restrictiveness will be monitored, and it must be outlook dependent
and data driven. When this happens, the country would have a more
entrenched import substitution policy strategy, boosting the industrial sector
as a vibrant engine of growth and net employer of labour.
4.0 Conclusion
The current positive engagement and collaboration between the monetary
and fiscal authorities must continue to strengthen the effectiveness on ongoing
policies
to
spur
growth
and
contain
inflationary
pressures.
Consequently, decisive policy action is still needed in the near future to
bolster investment in critical sectors such as energy. The fiscal authority may
need to do more to tackle security challenges and upgrade infrastructure to
promote domestic food production and other economic activities.

5. EMEM USORO
At the Monetary Policy Committee (MPC) held on February 19-20, 2025, I voted
to:
i. Retain the MPR at 27.50%
ii. Retain the Asymmetric Corridor at +500/-100 basis points around the MPR.
iii. Retain the CRR at 50% for commercial banks and 16% for merchant banks;
and
iv. Retain the LR at 30.0%.
This decision followed a thorough assessment of prevailing domestic and global
economic conditions, the consensus outlook and balance of macroeconomic
risks. It is pertinent to note that the rationale behind my decision was driven by
several considerations outlined below.
• Global economic expansion has slowed, since the last MPC meeting, fuelled
by the downturn in the services sector. In addition, geopolitical risks, and
uncertainty in trade policies, particularly between the United States and
other major economies like China, and Canada contributed to supplydemand imbalances, and rise in the prices of global commodities like crude
oil and gold.
• Global disinflation appears to be stalling, prompting most central banks to
maintain a “wait-and-see” monetary policy stance, with a few others taking
an accommodative policy stance to support growth. Furthermore,
heightening global uncertainties have led investors to lean towards flight-tosafety positions, which has implications for capital inflows to emerging
markets and developing economies (EMDEs) and exchange rate volatility.
• Looking ahead, the outlook for the global economy remains mildly
optimistic as growth is expected to continue albeit at a moderate pace due
to tight financial conditions; trade and fiscal uncertainties amongst major
economies like the United States, China and Canada; and prevailing
geopolitical tensions and risks. Global inflation is, however, expected to
decelerate due to decline in commodity prices and tight monetary policy.
• Inferences from these global developments highlight several pressure points
including subdued global growth and weakening commodity prices, which
might impact Nigeria’s fiscal and external positions negatively. Furthermore,
heightening inflation risk might prompt higher for longer monetary policy
stance, which might impact capital flows to EMDEs.
• On the domestic front, the pace of domestic inflation has slowed since the
last Monetary Policy Committee (MPC) meeting, with headline inflation rising
by 0.2 percentage points between November and December 2024. Headline

inflation stood at 24.48% in January 2025, following the rebasing exercise,
driven by changes in the weights of items in the consumption basket such as
the reduced contribution of food inflation to headline inflation. This resulted
from observed changes in general consumption patterns over the years.
• Key drivers of recent inflation dynamics include tight financial conditions
which resulted from the recent tight monetary policy stance. Specifically,
credit contraction between December 2024 and January 2025; marginal
exchange rate appreciation, driven by FX reforms such as the launch of the
BMatch system and the FX code; and tight liquidity conditions occasioned
by sustained tight monetary policy stance supported the easing of inflation
outcomes.
• In addition, sustained economic expansion in the agriculture and industrial
sectors, depicted by the Purchasing Managers’ Index (PMI), as well as
optimism about the macroeconomy by households and businesses also
contributed to recent price development. It is noteworthy to spotlight the
contemporaneous relationship between agriculture and industrial output
and deceleration in inflation, implying that inflation is more supply-driven
than demand-driven. Thus, recent efforts by the Federal Government
geared towards improving productivity via infrastructural development, and
ensuring food security is commendable, given the potential to tame
inflation.
• The domestic economy retains a cautiously optimistic outlook in the nearterm as growth is expected to continue to improve, supported by increased
crude oil production, infrastructural development initiatives, and social
programs, which are expected to stimulate aggregate demand. While this
can support economic growth, it also poses upside risks to inflation,
especially if government deficit financing relies heavily on domestic
borrowing. Inflation remains a major concern, even though the outlook has
flipped from uncertain to mildly optimistic. As a result, inflationary pressures
are likely to remain moderately elevated in the short term, driven by the
fiscal pressures and supply-side constraints.
• The external sector outlook is bolstered by increased domestic crude oil
production, and the anticipated value-chain expansion due to increased
output from the various domestic refineries now in operation. Furthermore,
increased capital inflows due to sustained tight stance, decelerating
inflation, and bullish capital market activities from the ongoing bank
recapitalisation exercise will support accretion to external reserves,
exchange rate stability and expansion of the fiscal space.
• A macro-risk assessment reveals existence of several risks to the global
economy, including increasing geopolitical tensions and the impact of trade
policy uncertainties, which might heighten supply chain disruptions, hamper
global economic activity, and disrupt global markets. On the domestic front,
supply chain disruptions emanating from structural factors, including

infrastructural deficits and security challenges, continued to pose downside
risks to growth and upside risks to the inflation outlook.
• Given these risks, retaining the policy rate allows monetary policy not only to
support the outcome of fiscal reforms which are complementary to the
lowering of domestic prices, but also helps to allow for a gradual and
market-driven adjustment of the exchange rate.

6. LYDIA SHEHU JAFIYA
Global economic growth remains stable with positive prospects for the
medium-term on account of sustained growth in the Advanced Economies,
rebound of economic activity in China, and improved economic
performance in many Emerging Market and Developing Economies (EMDEs).
Consequently, the January 2025 World Economic Outlook (WEO) has revised
global growth projections upwards to 3.3 per cent in 2025 from its 3.2 per cent
projection in the October 2024 forecast. Growth in the Advanced Economies
is projected to increase to 1.9 per cent in 2025 from 1.7 per cent in 2024, while
in the EMDEs, growth remained stable at 4.2 per cent.
Global headline inflation has declined significantly due to monetary policy
tightening in many countries and the abatement of supply chain shocks. In
most Advanced Economies, the pace of convergence of inflation towards
their long-run targets has slowed, necessitating a cautious tread in the path
of monetary policy normalization. The Emerging Market and Developing
Economies have also shown significant resilience in the disinflation process,
despite concerns over trade barriers, tight financial conditions, and capital
flow volatilities. The IMF WEO projects global headline inflation to moderate to
4.2 per cent in 2025 from 5.7 per cent in 2024.
Global trade growth is expected to slow to 3.2 per cent in 2025, from 3.4 per
cent in 2024. This decline reflects increased uncertainty in trade policies in the
light of escalating trade tensions and economic fragmentations threatening
global supply chains.
THE DOMESTIC ECONOMY
The domestic economy continued its upward trajectory, with real GDP (yearon-year) growing by 3.84 per cent in Q4 2024, up from 3.46 per cent apiece
in Q3 2024 and Q4 2023, respectively. The non-oil sector, led by growth in the
Services sector, grew by 3.96 per cent in Q4 2024, while the oil sector grew by
1.48 per cent in the same period. This growth was corroborated by
improvement in the Composite Purchasing Managers Index (PMI), consumer
and business expectations indices, signalling improvement in the business
environment.
Headline inflation (year-on-year) increased to 34.80 per cent in December
2024, up from 34.60 per cent in November. However, on a month-on-month
basis, it moderated to 2.66 per cent in December 2024, from 2.98 per cent in
November. Both the food and core components of the index remained the
main drivers of headline inflation, with food inflation easing marginally to

39.84 per cent in December 2024 from 39.93 per cent in November.
Conversely, core inflation rose to 29.28 per cent in December 2024, from
28.75 per cent in November. Following the rebasing and revision of the
weights of the consumption basket by the National Bureau of Statistics using
2024 as base year, headline inflation for January 2025 stood at 24.48 per
cent, while food and core inflation stood at 26.08 and 22.59 per cent,
respectively.
The rebasing of the Consumer Price Index aimed at providing a more
accurate reflection of domestic price developments, using a base year that
provides a more realistic baseline. On a related development, monetary
indicators showed a decrease in Broad Money Supply, indicating a decline in
overall system liquidity.
Developments in the external sector points to a stronger external position,
despite persisting tight financial conditions. As of 10th February 2025, external
reserves are sufficient to cover imports of goods and services for up to 9.6
months. The Balance of Payments remained resilient with a positive current
account balance in the review period.
In the foreign exchange market at end-December 2024, the naira
appreciated against the US dollar at the Nigerian Foreign Exchange Market
(NFEM) and Bureau De Change (BDC), reflecting strong market recovery,
following deliberate policies by the monetary and fiscal authorities to stabilize
the market, supported by favourable external sector developments.
Financial Soundness Indicators (FSIs) of the banking industry were within their
macroprudential limits, suggesting that the system is safe, sound and resilient.
CONSIDERATIONS FOR VOTING
The February 2025 Monetary Policy Committee (MPC) meeting held against
the backdrop of declining inflation, exchange rate appreciation, increase in
real Gross Domestic Product, and strong external sector position. The
improvement in economic performance could be linked to the policy
alignment between the fiscal and monetary authorities towards disinflation,
accelerated growth and stable exchange rate.
It is noteworthy that in the last one year, the Committee has remained
focussed on the Bank’s mandate of achieving price stability conducive to
inclusive growth, by consistently pursuing a restrictive monetary policy to rein
in inflation. Following a precise and well calibrated monetary policy, the
trajectory of economic growth was sustained, and longer-term inflation
expectations anchored. The observed decline in Broad Money Supply is thus,
in line with the tightening policy of the central bank. While I am optimistic of
the sustainability of the current downward trend in inflation following the

rebasing exercise, supported by declining prices of food and energy
commodities; lingering geopolitical uncertainties and global economic
fragmentations could trigger new supply chain disruptions and these portend
risks to domestic price development.
I have had a firm belief that monetary and structural factors are the leading
drivers of current headline inflation. I am convinced that with ongoing fiscal
support to tame structural constraints in the real sector, price development
will further moderate in the medium term as output improves. As such, the
fiscal authority remains committed to seeking new ways of addressing the
current supply-side challenges confronting the economy, to compliment
what the monetary authority is doing on the demand-side.
There is no gainsay that there has been a remarkable improvement in oil
production and agricultural output on account of new investments in the oil
and gas industry, coupled with improved security in the Niger Delta and food
producing belts of the nation. Indeed, the government has embarked on
aggressive investment in critical infrastructure to support growth leading
sectors, including addressing security challenges.
The Fiscal authority remains committed to medium-term revenue and
expenditure frameworks, required to strengthen public finances, create fiscal
space, keep public debt on a sustainable path and ensure that deficit
financing remains within the threshold allowed by the Fiscal Responsibility Act
2007. Strategic measures are in place to improve government revenue and
entrench fiscal prudence. These includes ongoing deployment of technology
to ramp up revenue collection, implementation of tax administration reforms
and tax automation systems, and comprehensive customs modernization
program to boost non-oil export and revenue. Also, Nigeria’s policy on cash
management has been revised to engender sound fiscal discipline and
sustainable economic development.
In recent months, we have seen a lot of inflows and investor appetite on
account of the relative stability of the naira and our current positive real
interest rate offers a risk premium for investors. But beyond external financing,
and given the nationalistic tendencies around the globe, I share in the view
that there is need to adopt an inward-looking growth and development
strategy, leveraging our wealth of physical and human resources, including
creating an adequate environment for private sector investment in sectors
that create jobs and boost productivity, as well as in critical infrastructure
through public private partnership to develop the economy.
Considering these developments and the ongoing recovery of domestic
economic indicators, I do not see the need for further policy tightening at this
meeting. I believe that a hold is more appropriate to calm financial

conditions and improve investment and output. Past decisions of the MPC
are still working their way through the economy and, I expect that inflationary
pressures will continue to moderate. I therefore, vote to retain all policy
parameters at their extant levels, while monitoring future economic
developments and to respond appropriately to emerging risks.

7. LAMIDO ABUBAKAR YUGUDA
Global Macroeconomic Developments
Global output is projected to remain stable at 3.3 per cent in 2025 and 2026,
up from 3.2 per cent in 2024, mainly on account of higher growth in EMDEs
(supported by a pickup in economic activities in China) and a resilient
recovery in the US.
Global inflation continued to moderate in 2024 and is expected to decline
further to 4.2 per cent and 3.5 per cent in 2025 and 2026 respectively.
Inflation developments are rather mixed in the AEs, with inflation in the UK
falling from 2.8 per cent in October 2024 to 2.5 per cent December, while in
the EU inflation rose steadily from 2.0 per cent to 2.5 per cent between
October 2024 and January 2025. Inflation in the US reached 3.0 per cent in
January 2025, moving further away from the Feds 2.0 per cent target. In
addition, the recent announcement by the new US administration of their
intention to impose import tariffs on a large cross-section of imports from
important trading partners is amplifying fears of a renewed rise in inflation in
the US and across the globe. As a consequence, the Fed has paused rate
cuts, while further ECB rate cuts are looking less certain. This could have the
potential of slowing or even reversing capital flows to EMDEs. Therefore, the
MPC needs to be vigilant, to stave off any spillovers that could threaten the
relative stability in the domestic foreign exchange market.
The IMF WEO (January 2025 update) projected a decline of 11.7 and 2.6 per
cent in the price of crude in 2025 and 2026 respectively. On average food
prices declined in January 2025 relative to December 2024.
Domestic Economic Developments
Real output grew by 3.46 per cent in Q3 2024 and is projected to grow by 3.82
per cent in Q4 2024 owing to improvements in crude oil production and
agricultural output. However, the composite PMI declined marginally to 50.2
points in January 2025 from 51.3 points in December 2024, weighed down by
a contraction in the services PMI.
Inflation pressure especially from food and fuel prices is beginning to abate.
The year-on-year headline inflation was 34.80 per cent in December 2024
compared to 34.60 per cent in the previous month. However, month-onmonth headline inflation moderated to 2.66 per cent in December 2024 from
2.98 per cent in the previous month.
Effective from 1st January 2025 the National Bureau of Statistics (NBS) rebased
the Nigerian CPI basket, using 2024 as the new base year. Accordingly, in
January 2025 year-on-year headline inflation was 24.48 per cent, food

inflation was 26.08 per cent and core inflation was 22.59 per cent. These
numbers effectively represent the evolution in prices over the last twelve
months. Monetary policy must therefore continue to be vigilant with a view to
bringing inflation within the policy target range.
In January 2025 broad money supply (M3) declined by 1.87% to ₦110.98
trillion relative to end-December 2024. Similarly, M1 and M2 declined by
4.38% and 1.86% to ₦36.89 trillion and ₦110.97 trillion, respectively. On an
annualised basis, the excess growth in M3 narrowed to 6.79 percentage
points, higher than the 2024 programme target of 15.60%. This is a good
indication of policy success, if sustained, would contribute to further slowing
of domestic inflation. Also, a good outturn from the monetary survey is that
the relative contribution in January 2025 of NDA and NFA to total money
supply growth are roughly even (19.96 per cent and 22.81 per cent
respectively). This points to emerging balance of the external and domestic
sectors, and would help in the stability of the naira exchange rate.
The overall balance of payments recorded a surplus of US$ 4.21 billion in the
third quarter of 2024, a significant improvement over the US$2.47 billion
achieved in the second quarter. Notably the current account recorded a
higher surplus of US$6.06 billion compared to US$3.92 billion registered in the
second quarter, as import bills for fuel products declined owing to increasing
domestic production. The gross external reserves position at the end of
January 2025 was US$38.71 billion, down from US$40.19 billion at the end of
December 2024, equivalent to more than nine months of imports of goods
and services and 13.5 months of import cover for goods only.
Revenue-based fiscal reforms implemented in 2024 increased FGN revenue
by 61 per cent to N9,650 billion in 2024 relative to 2023. This represented 49.05
per cent of target (N19,672.17 billion) under the 2024 Budget. However, FGN
expenditure achieved 86.55 per cent (N24,907.35 billion) of the budgeted
sum (N28,777.40 billion) reflecting a combination of a 50.04 per cent shortfall
in capital expenditure and a 6.02 per cent excess in recurrent expenditure
arising from higher-than-budgeted debt service payments. Consequently, the
fiscal deficit (N15,257.24 billion) exceeded the budget projection (N9,105.24
billion) by 67.57 per cent.
The public debt stock increased to N142.32 trillion in the third quarter of 2024
compared to NGN134.29 trillion in the second quarter of 2024 owing to both
new borrowings and exchange rate revaluation of the foreign debt
component.
Policy Discussion and Key Risk Factors
Recent domestic macroeconomic developments amply demonstrate that
the tight monetary policy stance over the past one year is beginning to yield

the desired effect. The growth of broad money is slowing; stability has
returned to the foreign exchange market (and is further being enhanced by
the adoption of the Nigeria Foreign Exchange Code in January 2025); the
exchange rate has appreciated to a more reasonable level; key inflation
drivers – PMS and food prices - are beginning to slow down; the overall
balance of payments is improving; the foreign exchange reserves are
growing; and significant improvements in both crude oil production and
domestic refining of crude oil are having noticeable positive impact on
output growth and the external sector of the Nigerian economy.
The recent reforms have generated confidence that is engendering
bullishness in naira denominated assets, with stocks and Eurobonds rallying
and yields declining. The sovereign risk spread has also declined to its lowest
level since the pandemic. Thus, it would be imperative for all the factors
sustaining confidence in the economy to be preserved.
There are, however, certain key external risk factors to the growth outlook.
These include the geopolitical developments in Europe and the Middle East
and the impact of the emerging international trade dispute between the US
and its key trading partners.
New ideas are being proposed by different stakeholder nations on the way
forward for resolving the war between Russia and Ukraine and the conflict in
the middle east. Achievement of sustainable peace on both fronts will be
beneficial to Nigeria and the global economy.
The protectionist trade policy stance recently announced by the US,
represents a significant risk factor for global trade and economic growth.
Already many of the countries targeted for higher tariffs have announced
retaliatory measures. The impending trade wars could thus, increase costs of
essential inputs across different industries in many countries thereby
increasing the general price level, dampening consumer demand,
decreasing global output, eroding corporate profits, jolting currency markets
and heightening volatility across several asset classes.
There is therefore a need for Nigeria to create and maintain adequate fiscal
and foreign exchange buffers as a precaution.
On the fiscal front Nigeria needs to expand its capacity for increasing
investment in critical public infrastructure via well-designed public-private
partnerships that have been shown to significantly reduce reliance on
national budgets in many peer countries.

Given the balance of internal and external economic and financial
developments, I am persuaded that the MPC should hold all the policy

parameters and allow the initial policy tightening to work through the system,
while remaining vigilant and ready to respond to future developments in the
domestic and global economies.
My Decision
In view of the foregoing, I voted to:
1. Retain the MPR at 27.50 per cent.
2. Retain the asymmetric corridor around the MPR at +500/-100 basis points.
3. Retain the Cash Reserve Ratio of Deposit Money Banks at 50.00 per cent
and Merchant Banks at 16 per cent.
4. Retain the Liquidity Ratio at 30.00 per cent

8. MUHAMMAD SANI ABDULLAHI
My Vote
At the inaugural meeting of this Committee in February 2024, we were
confronted with a range of both monetary and fiscal challenges, . We
recognized the inflationary pressures, including rising costs of essential goods
and services, and the distortions in the foreign exchange market, such as
currency volatility and misalignment, and thus, implemented targeted
monetary and fiscal policies to address these challenges effectively. The exit
from the old subsidy regime, which posed significant fiscal risks - namely
exchange rate instability, PMS, and electricity subsidies - along with the
cessation of development finance interventions, introduced new challenges
which required attention. As a result, significant frontloading occurred in 2024.
The MPC navigated through this difficult situation with transparency and
accountability, while maintaining a forward-looking perspective. The
Committee was clear on the direction of travel: tightening policy decisively to
raise real interest rates, incentivise capital inflows, and take further
complementary steps to reduce inflation.
Notwithstanding the rebased inflation numbers, a cautious approach was
paramount at this meeting, as the urgency of the situation we faced in
February 2024 may have eased considerably but with lingering risks of a fall
back. This indicates that the measures we implemented over the past year
have gained significant traction, as counterfactual evidence suggests that
inflation would have been higher had a baseline scenario been adopted.
Suffice it to say that we have a responsibility to bring inflation down to target
levels to support long-term economic stability and sustainable growth.
Although further interest rate hikes were not a primary consideration at this
meeting, ensuring that the measures implemented at previous meetings
remain effective as inflation persists, and maintaining the current policy
stance, was an essential consideration to achieve the desired reduction in
headline inflation. At this meeting, I therefore voted to retain all parameters
at their current levels. This decision does not in anyway, negate my
unwavering commitment to tackling inflation.
Specifically, I voted to:
1. Retain the MPR at 27.50 per cent.
2. Retain the asymmetric corridor around the MPR at +500/-100 basis
points.
3. Retain the Cash Reserve Ratio of Deposit Money Banks at 50.00 per
cent and Merchant Banks at 16 per cent.
4. Retain the Liquidity Ratio at 30.00 per cent.

My Considerations
Inflation Trends and Dynamics
We recognised the obvious passthrough effect of exchange developments
to domestic prices and acknowledge that stability in the foreign exchange
rate will complement our tightening stance. Consequently, the Committee
hiked rates by a total of 875 basis points in 2024. One year after, I am
convinced that the measures we took are yielding the expected dividends
as we have gained substantial mileage.
A spectrum of monetary and non-monetary factors contributed to Nigeria’s
inflation in 2024. The economy faced significant inflationary challenges, with
the annual headline inflation rate remaining elevated. The data from the
National Bureau of Statistics, using the 2009 base year, showed that headline
inflation (year-on-year) as of December 2024 slightly surged to 34.80%, from
34.60% in November 2024 and 33.88% in the corresponding period of 2023.
This marked a continuous upward trend, with food and energy prices
remaining the main drivers of headline inflation. Additionally, the data
revealed a moderation in month-on-month inflation, which decreased to
2.66% in December 2024, down from 2.98% in November.
The lingering impact of the 2023 fuel subsidy removal is evident in persistently
high prices of petroleum products, such as petrol and diesel, as well as other
energy products like natural gas. These higher energy prices have resulted in
increased transportation and production costs, which are passed through to
consumers, particularly in sectors such as transportation, manufacturing, and
agriculture, further driving up food and core inflation.
The recent rebasing exercise and revision of the consumption basket weights,
using a 2024 base year, indicate that headline inflation for January 2025
remains high at 24.48% (year-on-year). The food and core components stood
at 26.08% and 22.59%, respectively, reflecting current consumption patterns.
While we acknowledge the implications of the rebased CPI on monetary
policy and economic planning, the sustainability of inflation reduction will
remain a key focus of policy going forward, considering potential risks posed
by energy price volatility and commodity price fluctuations.
While the Bank embarked on various foreign exchange reforms to engender
a
more
market-driven
price
determination
mechanism
to
support
macroeconomic stability, the accompanying naira depreciation impacted
domestic prices especially through imported goods. Albeit the local currency
has remained relatively stable since May 2024 owing to various reforms
including the introduction of the electronic trading (B-Match) system to foster
transparency and improve the efficiency and integrity of the FX market. This

was further complemented by the adoption of the Foreign Exchange (FX)
Code to promote ethical conduct in the Nigerian FX market.
In 2024, the complexity of the inflation environment prompted the Committee
to dedicate a significant portion of its discussions and considerations to
addressing the resurgence of inflation. The Committee’s response to
managing aggregate demand and tackling supply-side constraints was swift
and comprehensive on all fronts. The goal was to take whatever actions were
necessary to bring down inflation. Despite mixed outcomes, relative progress
was made across all measures of inflation, including food, core, and
imported inflation.
In response to rising inflation, the Committee implemented policy rate hikes at
all its meetings in 2024, totaling 875 basis points, thus, raising the Monetary
Policy Rate (MPR) to 27.50%. Despite these tightening measures, inflation
remains a significant challenge for the Nigerian economy
In view of the complex inflation environment and the lagged impact of
previous measures taken by the Committee, the MPC reiterated the need for
other structural measures to complement monetary policy actions taken.
Improved domestic productive capacity and stronger exports would address
imported inflation and exposure to the vagaries of commodity price
fluctuations and at the same time support exchange rate stability and the
effectiveness of monetary policy actions.
As in previous statements, let me reiterate that targeted investments in
transportation and storage infrastructure for food and other agricultural
products are crucial to lowering food prices and addressing food inflation. As
observed in recent weeks, improved refining capacity has led to a significant
decrease in petrol prices and a reduction in fuel imports. Moving forward,
these developments are expected to support the sustainability of inflation
reductions, particularly considering the rebased CPI, as well as help mitigate
potential risks from fluctuations in food and energy prices.
Global Developments
Output growth in the global economy remained stable, despite signs of
persistent headwinds. The IMF (World Economic Outlook, WEO) has
forecasted that global growth will likely remain flat at 3.3% in both 2025 and
2026, compared with 3.2% in 2024. Growth in advanced economies is
projected to increase to 1.9% in 2025, up from 1.7% in 2024, while it is
expected to remain steady at 4.2% in the EMDEs.
Global inflation is forecast to continue its decline in 2025 and 2026, supported
by expectations of a further decline in energy prices and easing supply chain

disruptions. However, the expectation of sustained policy rate cuts by central
banks in key advanced economies may not materialize due to fresh
uncertainties in the global economy, particularly as retaliatory trade tariffs
from U.S. trading partners could lead to a general rise in global price levels.
The International Monetary Fund (WEO, January 2025 update), however,
forecast global inflation to continue to moderate from 5.7% in 2024 to 4.2% in
2025 and 3.5% in 2026.
Domestic Economic Developments
External Sector
Nigeria’s external sector remains resilient, with the balance of payments
posting a surplus of US$6.06 billion, or 13.04 per cent of GDP, in the third
quarter, primarily driven by an improved trade balance. The external reserves
stood strong at US$39.4 billion as of 14th February 2025, providing an import
cover of 9.6 months for goods and services. This level of coverage suggests a
robust buffer for meeting the country’s import obligations, highlighting the
stability of the external reserves at this time. Despite the potential risks posed
by global economic fragmentations to key corridors of foreign exchange
inflows to Nigeria, we would continue to support and strengthen policies that
drive growth of exports and remittance flows to provide foreign exchange
liquidity and support exchange rate stability.
Other Developments in the Economy
In the third quarter of 2024, real GDP expanded by 3.46 per cent year-onyear, up from 3.19 percent in Q2 2024. This growth was primarily driven by the
Services sector, which saw robust growth of 5.19 per cent, thus, significantly
boosting overall output. However, the composite Purchasing Managers' Index
(PMI) expanded to 50.2 in January 2025, indicating growth in economic
activity for the second consecutive month, though slightly lower than the 51.3
recorded in December 2024. The PMI for agriculture and industry both
expanded, while the services PMI contracted. The relative stability in the
foreign exchange market is expected to mitigate the impact of high input
costs on businesses and enhance competitiveness. Despite the high cost of
credit, adjustment shocks from economic reforms, and inflationary pressures
that have affected real income and manufacturing costs, economic growth
has remained resilient.
Monetary base and Broad Money liabilities moderated in January 2025 in
tandem with the Bank’s tightening stance. The banking sector remains robust,
and continues to support economic activities, with non-Performing Loans
(NPLs) staying below the 5.0% prudential benchmark at 4.2 per cent. In

addition, the Central Bank remains vigilant in ensuring financial system
stability and soundness.
The fiscal outlook is stable, supported by expected improvements in revenue
and ongoing efforts to rebuild fiscal buffers. Ongoing fiscal reforms have
translated into improved revenue for the Federal Government. Thus, year-onyear, the government’s retained revenue improved by 60.88 per cent as of
end-December 2024 compared with the corresponding period of 2023. Both
the oil and non-oil sectors contributed to this improved revenue. Oil (FAAC)
receipts increased by 12.09 per cent year-on-year. Additionally, given the
expansionary budget of 54.9 trillion for the 2025 fiscal year, complementary
measures will be required to effectively manage the potential fiscal risks as
they materialize.
In conclusion, my decision to vote to maintain all policy parameters reflects
my firm commitment to reducing inflation, ensuring price stability, and
fostering long-term economic growth. This decision will require constant
vigilance, given the current challenges and potential future risks that could
significantly influence the direction of policy. We are also working to
strengthen our communication efforts to shorten the lagged impact of
previous policy adjustments, ensuring a more immediate effect moving
forward.

9. MURTALA SABO SAGAGI
Context
There is a renewed optimism for global recovery with the sudden reversal of
US foreign policy on global conflicts. The aggressive push by the US towards
negotiations by parties involved, is signaling an eminent pause to the RussiaUkraine war and ease of tensions in the Middle-East. The projection for global
output growth is expected to remain stable, supported by strong global
demand. However, there is a possibility of rising global inflation if the trade
war between the US and some of its trading partners persists. In the last
quarter of 2024, the Nigerian economy exhibited signs of gradual recovery
and inflationary pressures appear to be easing mainly due to falling prices of
food items, reduction in energy prices and modest improvement in the
exchange rate. The positive outlook is even more apparent with the new
rebasing exercise which indicates positive real interest rates for the first time in
more than a decade. A mix of policy response is, therefore, needed to
sustain the recovery and restore the country to a path of inclusive growth.
Global and Domestic Environments
The IMF projection for global growth in 2025 remains at 3.3 per cent. Even
with the risk of escalating trade tensions, output growth in the Advanced
Economies is projected to rise to 1.9 per cent in 2025 from 1.7 per cent in
2024. However, the reaction of Europe to the negotiations for settlement of
the Russia-Ukraine conflict in the face of tough mediations by the US, may
potentially create another disruption to global stability. In the Emerging
Markets and Developing Economies (EMDEs), the growth projection has
equally remained unchanged at 4.2 per cent for 2025. A more positive
outlook is expected from Sub-Saharan Africa where output growth is
projected to increase to 4.2 per cent in 2025 from 3.8 per cent in 2024. The
relatively positive outlook in global growth is likely to persist with increased
consumer spending supported by lower energy and food prices.
In 2023, global inflation began easing mainly due to the monetary tightening
stance of several central banks around the world, coupled with fiscal
interventions aimed at lowering energy, housing and food prices. In 2025,
inflation is forecasted to further moderate to 4.2 percent in 2025 from 5.7 per
cent in 2024. The moderation in inflation and the need to spur growth
informed further rate cuts by some central banks early in 2025.
Recently, Nigeria has joined some African countries, namely Ghana, Kenya,
South Africa, and Egypt, that achieved positive real interest rates. This does
not, however, suggest that the economy has achieved the desired level of
stability and transformation envisioned by the reform agenda of the

government. There are still certain structural rigidities and governance issues
that are yet to be overcome.
This notwithstanding, Real GDP grew in the third quarter of 2024 by 3.46 per
cent (year-on-year) compared with 3.19 per cent in Q2 2024. In spite of the
modest growth, headline inflation (year-on-year) rose to 34.80 per cent in
December 2024 from 34.60 per cent in November. Remarkably, the rebase
figures showed that headline inflation for January 2025 stood at 24.54 per
cent (year on year) and food inflation at 26.08 per cent. The observed drop
in food prices across the country from December 2024 to February 2025 and
the slight reduction in transportation cost as a result of the reduction in
petroleum pump prices by the Dangote refinery will, invariably, help reduce
inflationary pressures in the country.
Major Considerations
1. Balance of payment: recorded an improved surplus of US$4.21 billion in Q3
2024 from a surplus of US$2.47 billion in Q2 2024.
2. Foreign exchange: at the NFEM, naira appreciated by 3.75 per cent, to N1,
478.22/US$ at end-January 2025 from N1, 535.82/US$ at the end-December
2024.
3. The gross external reserves stood at US$39.4 billion by mid-February 2025, a
slight decrease from US$ 40.19 billion at the end December 2024.
4. The rebasing exercise has enabled Nigeria to achieve a positive real
interest rate.
Conclusion
There are indications that inflation in Nigeria is moderating and the growth
prospect is positive. This trend must be sustained through coordinated policy
implementation and monitoring mechanisms. I am therefore cautiously
optimistic that the future outlook will remain positive.
Accordingly, I voted to:
• Retain the Monetary Policy Rate (MPR) at 27.50 per cent
• Retain Asymmetric Corridor around the MPR to +500-100 basis points.
• Retain the Cash Reserve Ratio of Deposit Money Banks at 50 per cent.
• Retain the Cash Reserve Ratio of Merchant Banks at 16.0 per cent.
• Retain the Liquidity Ratio at 30.0 per cent.

Recommendations
1. A more deliberate approach to reducing fiscal dominance is instructive to
avoid losing the gains achieved in the last three months.
2. With the tax reforms in the pipeline, fiscal and monetary interventions are
needed to reduce credit concentration and unlock growth opportunities for
small businesses, especially those operating in the informal sector.
3. The efforts of states to attract transformational Foreign Direct Investments
should be better coordinated and supported to enhance local productivity
and promote exports.

10. MUSTAPHA AKINKUNMI
Context
As historically data-driven evidence suggests a stronger association (an
estimated correlation of nearly 0.9) between the monetary policy rate and
key Nigerian macroeconomic variables such as the exchange rate, inflation
rate, and money supply, this high correlation indicates that monetary policy
plays a pivotal role in shaping these variables and, consequently, broader
macroeconomic developments. The Central Bank of Nigeria (CBN) thus,
strategically used monetary policy tools to influence these variables through
2024. These reforms have impacted positively through a stronger naira value,
positive real interest rate, declining inflation momentum and robust
economic growth (3.84% in Q4 2024). Ensuring the consistent impact of the
2024 monetary policy reforms by the Central Bank of Nigeria (CBN) would
likely result in the following outcomes: sustained exchange rate stability;
controlled inflation; increased investor confidence; better access to credit
and financial inclusion; as well as improved public confidence and
economic sentiment.
With a stronger currency and reduced exchange rate spreads, banks may
experience improved capital flows and liquidity, potentially increasing their
lending capacity. If the naira strengthens significantly, the local currency
value of foreign-denominated debt will reduce, thus, easing the burden of
debt servicing. When the exchange rate spread becomes narrower, it
reduces the incentive for speculative trading, thus promoting a more stable
foreign
exchange
market,
prevent
manipulation
and
enhancing
transparency.
However, President Trump’s policies may have a mixed impact on the
Nigerian economy, with the most significant impact arising from trade
tensions, oil market volatility, and immigration restrictions. While there may be
some benefits to the new US foreign and trade policy, such as the temporary
lifting of oil sanctions on some countries and improved security cooperation
with others, the overall impact may be challenging for Nigeria, particularly in
terms of trade, investment, and diplomatic relations. Trump's protectionist and
unilateral approach has reduced the likelihood of long-term beneficial
engagements with Nigeria, especially compared to the more multilateral and
collaborative approach of previous U.S. administrations. The decline in OECD
aid presents significant challenges to Nigeria, particularly in terms of poverty
alleviation, health, education, infrastructure development, and economic
diversification. While Nigeria is increasingly focusing on domestic resource
mobilization, the loss of aid could slow progress in achieving the country’s

development goals and exacerbate socio-economic issues, especially in the
face of existing challenges such as security threats and inflationary pressure.
Global and Domestic Economic Developments
Global projections reflect a balanced mix of slow growth in AEs and robust
growth in EMDEs. Advanced economies tend to grow at a slower pace due
to factors such as aging populations, slower productivity growth, and higher
levels of existing economic development. The forecast of 1.9% growth in
these regions indicates moderate growth, often driven by consumption,
services, and technological advancements. On the other hand, Emerging
Market and Developing Economies (EMDEs) are expected to see more robust
growth at 4.2%, due to several factors such as higher population growth,
ongoing infrastructure development, a rising middle class, and increased
industrialization. These economies are generally in the earlier stages of
development, allowing them to benefit from faster productivity gains, capital
investment, and urbanization. Consequently, the 2025 growth forecast for
most advanced economies is below 2% with the exception of the US (with
2.7%). In the EMDEs, India is expected to grow by 6.5% in 2025, followed by
Kenya (5.4%), China (4.6%), Ghana (4.2%), Nigeria (3.2%) and South Africa
(1.5%). The overall global growth projection of 3.3% thus, reflects a balanced
mix of these advanced and developing economies, with EMDEs helping to
drive the broader global growth rate. Nigeria’s growth forecast of 3.2% in
2025 reflects gradual improvement as the country grapples with economic
challenges, including inflation, oil price fluctuations, and security concerns.
The global inflation is anticipated at 4.2% in 2025 and 3.5% in 2026, suggesting
expectation of a slight decline in global inflation. In the advanced
economies, the direction of monetary policy shows divergence at the most
recent meetings held between January and February 2025 by central banks
in the group. In Europe, ECB and BoE lowered rates by 25 bps to reach 2.75%
and 4.5%, respectively, while the BoJ increased by the same basis points to
attain 0.50%. The US Fed, however, paused its monetary policy normalization
drive, and held its policy rate at 4.25 – 4.50% amidst uncertainties associated
with the new US trade policy. The ECB's decision to reduce interest rates was
in response to slower growth and potentially moderating inflation, thus
requiring the Bank to support consumption and investment. In the EMDEs,
China and Russia held rates at 3.10% and 21.0%, respectively, since October
2024 while the Brazilian Central Bank increased its policy rate to 13.25% from
10.50%. The Central Bank of Kenya reduced its rate by 50 basis points to
10.75% in February 2025 while those of Ghana and Egypt held their rates at
27.00 and 27.25% respectively. Nigeria's Monetary Policy Rate (MPR) of
27.50%, which is the fifth highest in the world (after Venezuela 59.4%; Turkey

45%; Zimbabwe 35%; Argentina 29%) reflects the country’s ongoing battle
with inflation, currency depreciation, and economic instability.
Global economic conditions (as indicated by the global PMI) have
maintained a better health since January 2023. The global service sector has
consistently reported good conditions while the manufacturing sector
continues to face difficulties with the recorded PMI still below the 50 index
point mark. Implications: The global economic outlook remains cautiously
optimistic, with services driving recovery but with manufacturing facing
challenges. If supply chains continue to improve, inflation stabilizes, and
geopolitical tensions ease, the manufacturing sector may regain strength.
However, continued attention to sector-specific policies and fiscal measures
will be crucial in ensuring a balanced recovery.
The naira continues to appreciate in a stable manner amidst declining
deposits in the banking sector. The drop of over N2 trillion in total deposits
suggests a substantial reduction in available liquidity in the banking system.
This is a marked change from previous months, as deposits in Nigeria have
been on a general upward trend since August 2024. The decline of Demand
Deposits (-4.30%) could indicate that businesses or individuals are
withdrawing funds from their accounts, likely due to a need for liquidity, an
increase in expenditure, or a shift in investment strategy. The decline of
Domiciliary Deposits (-2.40%) could be the result of changes in foreign
exchange dynamics, such as fluctuations in remittances.
In January 2025, individuals led the ownership of deposits with 45.20% of the
total bulk deposits in the banking system. This suggests that Nigerian
consumers, whether through personal savings accounts, current accounts, or
other forms of deposit, hold a significant portion of the liquidity in the banking
system. Private corporates hold 42.07% of total deposits, indicating a
significant role in the banking system, especially considering their lower
percentage compared to individual ownership. Therefore, I call for carefully
balanced monetary policy decisions in order to maintain consumer
confidence in the banking system.
The oil and gas sector continues to dominate the credit landscape, with the
largest share of N18 billion in credit facilities as of January 2025. This aligns
with the sector’s importance to Nigeria’s economy, given that oil is a major
source of revenue and foreign exchange for the country. Thus, further
economic diversification is required to reduce the economy’s vulnerability to
fluctuations in oil prices and global demand.
The Capital Adequacy Ratio (CAR) rose to 14.84% at the end of January
2025, up from 10.70% in January 2024. The increase in CAR reflects positive
movement in the capital strength of Nigerian banks, indicating that banks

have either raised more capital, improved profitability, or reduced risky
assets, thereby enhancing their ability to absorb shocks. While this
improvement is positive, 14.84% remains below the regulatory threshold for
many banks in the advanced economies, thus leaving room for further
improvement to meet international standards and cope with external
financial pressures. I therefore call for additional action to accelerate the
recapitalization process.
Non-Performing Loans (NPLs) ratio declined to 4.22% in January 2025 from
previous months since November 2024 with NPL ratio of 4.87%. This decline is
generally a good sign, indicating that more borrowers are meeting their
obligations, and banks may be addressing their non-performing loans more
effectively. It could also, reflect improved economic conditions and better
risk management practices. While this represents a positive trend, it is
important to note that NPLs were remained higher than the 4.15% recorded in
January 2024 leaving substantial room for improvement.
The increase in the Cash Reserve Requirement (CRR) held by the CBN from
N13.5 trillion in January 2023 to N26.6 trillion in January 2025. This reflects the
CBN’s efforts to manage inflation and control liquidity in the banking system.
This implies that commercial banks will be required to hold more reserves with
the central bank, which directly limits the amount of money in circulation. As
a result, this could lead to a contraction in credit to the private sector, which
will moderate inflationary pressures but may also slow down economic
growth.
Decision
In summary, the potential impact of the CBN's exchange rate reforms and
adjustments to the monetary policy rate in 2024 could include greater
currency stability, reduced inflation, and a more predictable business
environment. However, there are also risks, including the challenge of
maintaining the right balance between a stronger naira and the broader
economic realities, such as the impact on exports and government revenue.
The success of these reforms will depend on careful management of interest
rates, liquidity, and fiscal policies. I believe that the consistent implementation
of these reforms would contribute to a more stable, competitive, and growthoriented economy, enhancing Nigeria’s position as an attractive destination
for both local and global investors. In view of the above, I voted to keep the
Monetary Policy Rate (MPR), Cash Reserve Requirement (CRR), and Liquidity
Ratio (LR) unchanged as well as retain the asymmetric corridor at +500 and -
100 basis points around the MPR.

11. PHILIP IKEAZOR

Whereas the macroeconomic fundamentals remain stable in response to the
tight stance of monetary policy, the ongoing statistical recalibration of the
economy has thrown up contemporary issues that will affect the conduct of
monetary policy. In my view, a neutral monetary policy is necessary, to allow
the economy to assimilate these changes and avoid unnecessary disruptions.

I therefore voted to:

1. Retain the MPR at 27.50 per cent.

2. Retain the Asymmetric corridor around the MPR at +500/-100 basis
points.

3. Retain the Cash Reserve Ratio (CRR) of DMBs at 50.00 per cent.

4. Retain the Cash Reserve Ratio of Merchant Banks to 16.00 per cent.

5. Retain the Liquidity Ratio at 30.00 per cent.

Developments in the Global and Domestic Economy
While the global economy has demonstrated resilience in 2024, the
expectation is that growth will moderate in 2025, amid rising global
fragmentation, trade, and geopolitical tensions. The IMF projected the global
economy to grow by 3.3 per cent, below the historical average of 3.7 per
cent, while it projected a decline in inflation to reach 4.2 per cent in 2025.
However, the United Nations projected that the growth in world trade will
moderate to 3.2 per cent, weighed down by the increased uncertainty
resulting from trade frictions.

As anticipated, most central banks continued to tread the path of monetary
policy normalization with cautious optimism as the new global tariff regime
heightens leading to renewed inflationary pressure. This could interrupt fiscal
and financial stability, factors that monetary easing cannot sufficiently
reinvigorate. To complement monetary policy, the expectation is that fiscal
authorities will avoid overly restrictive policies and focus on mobilizing
investments in critical infrastructure to manage the global macroeconomic
environment.

The domestic economy continues to be resilient in the face of global
uncertainty, domestic inflationary pressures, and sustained fiscal injections by

the subnational government. The pressure in the foreign exchange market
has moderated significantly through the Bank’s deliberate policy actions to
instill market discipline in foreign exchange operations, while the money
market has been at its optimal level since November 2024. As such, the
operating target of monetary policy, the OBB rate, on average remains within
the asymmetric corridor set by monetary policy.

Despite these positive trajectories, the domestic economy remains
susceptible to global trade shocks, due to escalated trade and geopolitical
tensions around the world. The protectionist trade policy of the United States
and the reciprocity tariff policy of her top trade partners could inadvertently,
distort price dynamics, with renewed concern on the Implications for the
global and domestic economy.

My Considerations
The sustained tight stance of monetary policy and the Federal Government’s
commitment to implement comprehensive economic reforms, have ensured
the resilience of the domestic economy, even as inflationary pressure persists.
Real output grew by 3.46 per cent in Q3-2024 from 2.54 per cent in Q3- 2023.
Notwithstanding the positive real growth rate, the growth dynamics remain
below 1.0 percentage point, signaling slow growth.

Headline inflation (month-on-month) moderated to 2.44 per cent in
December 2024, down from 2.64 per cent in November 2024, reflecting
stability in both the bilateral and multilateral (effective) exchange rates.
However, on a year-on-year basis, it rose by 5.68 percentage points in the
same period, reflecting the response of the economy to the optimal price
regime of domestic energy prices.

The Nigerian economy is undergoing a statistical recalibration to moderate
historical biases in the estimation of the general price level. The ensuing
revision of the Consumer Price Index (CPI) by the National Bureau of Statistics
(NBS) shows a pattern that suggests a change in households’ consumption
basket, which has altered the path of monetary policy. Consequently,
headline inflation (year-on-year) declined by 5.42 percentage points at endJanuary 2025 compared with the same period in 2024, signaling positive
interest rates.

Broad money (M3) declined at end-January 2025 relative to end-December
2024 partly due to the decline in currency outside depository corporations.
Similarly, the monetary base declined slightly due to the decrease in currency
in circulation.

While the monetary aggregate is stable, determining the extent of this
stability under the current rebased CPI to make an informed decision,
invariably will require the re-calibration of the real demand for money which
determines the direction of monetary policy. Consequently, adopting a
neutral policy stance ensures that monetary policy is realigned to the new
framework of the rebased CPI and the expected revision of the gross
domestic product (GDP).

So far, the 2025 fiscal year has witnessed an increase in fiscal pressures,
largely from the sub-national government. While I agree that government
spending could fuel inflationary pressures, but if well channeled, it can also
have a stabilizing impact in the current global uncertainty.

Therefore, my support towards holding the policy and other rates constant at
this time, was meant to first consolidate the gains from our previous tight
stance, to signal commitment to price and financial system stability. Second,
this will allow the effects of the revision of the CPI to permeate the economy
as macroeconomic fundamentals adjust to these changes. Finally, this
decision will support the fiscal authority to manage the threats and
opportunities in the current trade tension, especially in re-export trade and
trade diversion, as well as the uncertainty about the foreign exchange
implications of the emerging global tariff regime.

In conclusion, although Africa is not a target in the ongoing tariff regime, it
could indirectly affect Nigeria, albeit positively, through increase in export
earnings. As we explore ways of ensuring a non-inflationary fiscal policy, I
believe that the implementation of the 2025 budget will generate
employment and growth to provide a soft landing for the economy and
moderate inflationary pressures.

12. OLAYEMI CARDOSO
Governor of the Central Bank of Nigeria and Chairman, Monetary Policy
Committee
Now more than ever, we are faced with a range of developments on both
the global and domestic fronts that cut across political and socio-economic
issues. This places a heightened burden on the Monetary Policy Committee
(MPC) to maintain vigilance and interrogate the data before us with even
greater rigour, to enable us take decisions that will positively impact the
economy and the Nigerian people in the long run. The importance of our first
meeting of 2025 cannot be overemphasised, serving as it does as an avenue
to assess the effectiveness of past policy actions and provide forward
guidance to stakeholders on our approach to monetary policy.
This meeting also came around the one-year anniversary of the composition
of the current MPC. Reflecting on all the challenges that confronted us a
year ago, the gains we have recorded thus far are clear to see on all fronts.
In general, we are seeing a moderation in inflation on the back of our tight
monetary policy stance, and counterfactual evidence indicates that inflation
would have ended the year at considerably higher levels without our policy
actions. We have also seen significant improvement in the functioning of the
foreign exchange markets following the adoption of orthodox policy
frameworks, resulting in a much more stable currency and improvements in
the structure and composition of the FX reserves.
Investor confidence is evidently very high and the competitiveness of Nigeria
as a destination for foreign investment has resulted in increased capital flows
through the economy. These positive developments are welcomed and
provide us with a degree of comfort that our policy measures are
contributing to the attainment of macro economic stability; but we must
remain vigilant and steadfast in our resolve given that the environment
remains fragile, and gains recorded thus far could be easily reversed.
A review of the global economy indicates an elevated level of uncertainties,
as geopolitical conflicts and divergencies in trade policies of major countries
threaten to hinder growth. The prospect of lower commodity prices and
volatility in asset prices is of particular concern, given its impact on fiscal
balances and the resilience of exchange rates in monolithic economies like
Nigeria. Increased protectionism and disruption to trade flows pose a risk to
the outlook for global inflation, which may lead to a slower pace of easing of
policy rates. A higher path of interest rates, especially across the advanced
economies, would thus impact capital flows to emerging markets and

introduce some complexities in the strategies adopted for exchange rate
management.
On the domestic front, the rebasing exercise of the Consumer Price Index
(CPI) conducted by the National Bureau of Statistics (NBS) has put the latest
headline inflation figures at 24.48%, going by the new reference base year
and the revised basket which reflects current consumption patterns. Whilst
we cannot make any direct comparisons with the previous inflation numbers
to infer a drop in aggregate prices, the supporting data and analysis
presented to the MPC does indicate a deceleration in the trend of inflation
which is expected to continue in 2025. Improved productivity in agriculture
and other targeted interventions from the fiscal authority are contributing to
a decline in food prices. In addition, the stability of the exchange rate is
expected to provide a positive anchor for inflation expectations.
The foreign exchange market has shown greater stability as a result of several
policy reforms by the Bank, the latest of which was the introduction of the
Electronic Foreign Exchange Matching System and the Nigeria Foreign
Exchange Code. These initiatives have not only improved market
transparency and bolstered investor confidence but also contributed to
sustained liquidity from foreign investment inflows, exports proceeds, and
remittances, all facilitating a more effective market-based price discovery
process for the naira. Given the importance of the exchange rate in the fight
against inflation and the sustenance of economic recovery and broader
financial stability, we must maintain a heightened level of surveillance in our
foreign exchange market and root out any bad actors and practices that
threaten the smooth functioning of the market and stability of the exchange
rate. The Central Bank has an unwavering commitment to this objective.
The Nigerian economy has remained resilient, and GDP growth was steady at
3.46% in the third quarter of 2024 with both the oil and non-oil sectors
contributing to this growth. Notably, oil production has risen to 1.54 million
barrels per day, strengthening the current account balance and bolstering
external reserves, which now stands at $39.4 billion. These positive
developments reflect the effectiveness of recent policy interventions and the
collaborative efforts of monetary and fiscal authorities in promoting
macroeconomic stability. We however must not let our guards down as we
need to remain vigilant to avoid practices that risks taking us backwards,
especially around the management of the financing of the budget to ensure
that fiscal deficit stays within acceptable levels.
The banking sector remains strong, underpinned by sound regulatory
oversight. The ongoing recapitalization process is a key priority to strengthen
financial institutions against external shocks by injecting high-quality capital.

The MPC has reaffirmed its commitment to closely monitoring this process to
safeguard financial stability and maintain public confidence in the sector.
In reviewing these economic conditions, I carefully weighed the arguments
for further monetary tightening, against the commencement of an easing of
our policy stance, or maintaining the current position. While an increase in
the policy rate could help further tighten liquidity conditions, reinforce
exchange rate stability, and attract foreign investment, recent indicators
suggest that inflationary pressures are beginning to ease on the back of prior
rate hikes. Easing of rates on the back of observed deceleration in inflation
also appears premature, given the fragility of the current environment and
persisting risks on the horizon that may induce a reversal of all the gains
recorded thus far. There is also the need to observe more data points on the
revised CPI numbers to allow for further interrogation of the expected
behaviour of prices in the rebased consumption basket, as well as validate
staff inflation forecasts and model estimates.
Moreover, global uncertainties—including geopolitical risks and restrictive
policies by major central banks—necessitate a cautious approach. These
considerations led me to align with the consensus of the Committee in
maintaining all policy parameters unchanged—a prudent decision aimed at
preserving stability and fostering long-term economic growth.
Thus, I 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 at 50.00% for Deposit Money Banks and 16.00%
for Merchant Banks.
Keep the Liquidity Ratio at 30.00%.


OLAYEMI CARDOSO
Governor
February 2025