Divide in the Ranks: CBN Holds Interest Rate at 27.5%, Experts React with Mixed Sentiments
Key Highlights & Breakdown of the MPC Meeting – July 2025
In a much-anticipated announcement on Tuesday, July 23, 2025, the Central Bank of Nigeria (CBN) held the Monetary Policy Rate (MPR) steady at 27.5% — marking the third consecutive hold this year. This decision, made at the conclusion of the 301st Monetary Policy Committee (MPC) meeting, has stirred a sharp divide among economists, business leaders, and financial analysts.
CBN’s Position: Inflation First, Growth Second
Governor Olayemi Cardoso explained the reasoning behind the CBN’s decision:
• The current rate stance is to sustain the ongoing disinflation trend.
• Policy will remain tight until inflation risks subside.
• Inflation has shown signs of slowing, with optimism for further decline supported by:
• Lower petrol prices
• Stable exchange rates
• Seasonal dips in food prices
The committee also maintained:
• CRR (Cash Reserve Ratio): 50% for Deposit Money Banks, 16% for Merchant Banks
• Liquidity Ratio: 30%
• Asymmetric corridor: +500/-100 basis points
Signs of Recovery: CBN’s Positive Indicators
• GDP Growth: 3.13% in Q1 2025 (vs. 2.27% in Q1 2024)
• Purchasing Managers’ Index: Indicates expanding business activity
• FX Reserves: $40.11bn as of July 18 — covering 9.5 months of imports
• Banking Sector: Stable; 8 banks have met recapitalization targets
Cardoso:
“Our policy toolkit is working. Inflation is coming down. But our goal is to bring it to single-digit levels.”
Mixed Reactions from Industry Leaders and Experts
Business Community Pushes Back
• Dr. Chinyere Almona (LCCI DG):
“27.5% is a depressing burden on businesses. We want to see a reduction.”
• Dr. Muda Yusuf (CPPE Director):
“Interest rates above 30% are crippling real sector investors and choking growth.”
• Dr. Femi Egbesola (ASBON President):
“This cautious move may help stability, but makes credit less accessible to small businesses.”
Support for Caution
• Mr. Adewale-Smatt Oyerinde (NECA DG):
“It’s a necessary step to consolidate gains and ensure long-term stability.”
• Prof. Akpan Ekpo (Economist):
“A better decision, even if tough on the real sector. The fight against inflation must be prioritized.”
⚠️ Critical Voices Sound the Alarm
• Marcel Okeke (Former Zenith Bank Chief Economist):
“Tight policy is injurious. Businesses can’t survive borrowing at 30–35%. They’re being priced out of survival.”
️ What’s Next?
The next MPC meeting is scheduled for September 22–23, 2025, and is expected to be another flashpoint in the debate between inflation control vs. economic stimulation.
Bottom Line
While the CBN sees signs of macroeconomic healing, the high interest rate continues to hamper access to affordable credit, especially for SMEs and the real economy. The rift among stakeholders reflects the complexity of managing post-reform Nigeria — where inflation, FX volatility, and weak purchasing power must be balanced carefully with growth ambitions.
Key Highlights & Breakdown of the MPC Meeting – July 2025
In a much-anticipated announcement on Tuesday, July 23, 2025, the Central Bank of Nigeria (CBN) held the Monetary Policy Rate (MPR) steady at 27.5% — marking the third consecutive hold this year. This decision, made at the conclusion of the 301st Monetary Policy Committee (MPC) meeting, has stirred a sharp divide among economists, business leaders, and financial analysts.
CBN’s Position: Inflation First, Growth Second
Governor Olayemi Cardoso explained the reasoning behind the CBN’s decision:
• The current rate stance is to sustain the ongoing disinflation trend.
• Policy will remain tight until inflation risks subside.
• Inflation has shown signs of slowing, with optimism for further decline supported by:
• Lower petrol prices
• Stable exchange rates
• Seasonal dips in food prices
The committee also maintained:
• CRR (Cash Reserve Ratio): 50% for Deposit Money Banks, 16% for Merchant Banks
• Liquidity Ratio: 30%
• Asymmetric corridor: +500/-100 basis points
Signs of Recovery: CBN’s Positive Indicators
• GDP Growth: 3.13% in Q1 2025 (vs. 2.27% in Q1 2024)
• Purchasing Managers’ Index: Indicates expanding business activity
• FX Reserves: $40.11bn as of July 18 — covering 9.5 months of imports
• Banking Sector: Stable; 8 banks have met recapitalization targets
Cardoso:
“Our policy toolkit is working. Inflation is coming down. But our goal is to bring it to single-digit levels.”
Mixed Reactions from Industry Leaders and Experts
Business Community Pushes Back
• Dr. Chinyere Almona (LCCI DG):
“27.5% is a depressing burden on businesses. We want to see a reduction.”
• Dr. Muda Yusuf (CPPE Director):
“Interest rates above 30% are crippling real sector investors and choking growth.”
• Dr. Femi Egbesola (ASBON President):
“This cautious move may help stability, but makes credit less accessible to small businesses.”
Support for Caution
• Mr. Adewale-Smatt Oyerinde (NECA DG):
“It’s a necessary step to consolidate gains and ensure long-term stability.”
• Prof. Akpan Ekpo (Economist):
“A better decision, even if tough on the real sector. The fight against inflation must be prioritized.”
⚠️ Critical Voices Sound the Alarm
• Marcel Okeke (Former Zenith Bank Chief Economist):
“Tight policy is injurious. Businesses can’t survive borrowing at 30–35%. They’re being priced out of survival.”
️ What’s Next?
The next MPC meeting is scheduled for September 22–23, 2025, and is expected to be another flashpoint in the debate between inflation control vs. economic stimulation.
Bottom Line
While the CBN sees signs of macroeconomic healing, the high interest rate continues to hamper access to affordable credit, especially for SMEs and the real economy. The rift among stakeholders reflects the complexity of managing post-reform Nigeria — where inflation, FX volatility, and weak purchasing power must be balanced carefully with growth ambitions.