At its 299th meeting, the Monetary Policy Committee (MPC) of the Central Bank of Nigeria decided to hold all policy parameters unchanged.
➢ Monetary Policy Rate (MPR): 27.5% – Unchanged
➢ Asymmetric Corridor: +500/-100 – Unchanged
➢ Cash Reserve Ratio (CRR): 50% for Deposit Money Banks (DMBs), 16% for Merchant Banks – Unchanged
➢ Liquidity Ratio: 30% – Unchanged
This is against the background of the recently released updated inflation data by the National Bureau of Statistics (NBS) which shows headline inflation standing at 24.48%, a huge drop from December 2024’s 34.80% (which was based on the old 2009 base year).
The big question is: why didn’t the MPC slash rates?
The unchanged policy parameters might not be unconnected with the observed
➢ Inflation moderating significantly
➢ Stronger Naira competitiveness
➢ Closing the gap between official and parallel FX markets
➢ Stabilizing financial markets
➢ General macroeconomic improvements
However, high food inflation remains the biggest threat. This is part of the current living reality in the country despite the willingness to celebrate in some quarters.
The December 2024 CPI report
➢ YoY food inflation eased to 39.84% in December (from 39.93% in November).
➢ MoM food inflation slowed to 2.66% (from 2.98% in November).
The statistics shows food inflation is still high, but the trend is pointing downward.
Meanwhile, the Federal Government’s push for agricultural incentives and improved security in food-producing regions is expected to bring food inflation down soon.
In its analysis, Comercio Partners is of the view that the MPC may not have cut rates yet, but if inflation maintains its month-on-month downtrend, then we should expect a rate cut before mid-year—a move that would boost growth, ease credit conditions, and solidify Nigeria’s trillion-dollar economy trajectory.
- Alex Ekemenah