CBN: Showing Confidence, Priortising Stability with MPR Decision, by Rahma Olamide Oladosu
For the first time in many years, Nigeria’s monetary policy environment is showing a coherence that cannot be mistaken for chance. The decision of the Monetary Policy Committee to retain the Monetary Policy Rate at 27 percent is not a routine pronouncement delivered at the end of another technocratic meeting. It is a bold statement of confidence from a Central Bank that has spent over a year rebuilding credibility, stabilising expectations, calming the foreign exchange market and restoring the discipline that monetary policy desperately requires. The evidence is now compelling, and for once, the numbers are speaking louder than the rhetoric.
Inflation has fallen for seven straight months. This alone is a remarkable development in an economy where inflationary cycles typically resist policy interventions, shrug off rate hikes and remain stubbornly elevated regardless of macroeconomic adjustments. The drop from 18.02 percent in September to 16.05 percent in October is not cosmetic. It reflects a structural shift in the forces driving prices. More importantly, it shows that the policies rolled out earlier in the year, which some critics described as excessively tight, are finally transmitting into the real economy. But perhaps the most dramatic indicator of this shift lies in food inflation. Falling to 13.12 percent, food inflation recorded one of its steepest declines in years, signalling improved local supply, reduced pressure from exchange-rate pass-through and a more predictable monetary environment. Nigeria’s food basket has long been a source of volatility, often overshadowing gains in other components of the inflation index. Seeing such a sharp decline is a sign that policy, supply and market conditions are aligning in ways that were previously rare.
The CBN’s stance is made even more credible by developments in the external sector. Nigeria’s external reserves rising by more than nine percent in a matter of weeks to reach 46.7 billion dollars is not an abstract macroeconomic milestone. It is a critical buffer that strengthens the country’s ability to defend the currency, stabilise the FX market and uphold investor confidence. Reserves at this level, capable of covering more than ten months of imports, significantly reduce Nigeria’s vulnerability to external shocks, especially at a time when global markets remain volatile. Combined with a surplus current account balance and improved capital inflows, the overall picture is that Nigeria is beginning to earn more foreign currency than it spends. This is not the outcome of a single policy action but the cumulative result of restored confidence, better FX management, improved inflows and disciplined fiscal-monetary coordination.
The sovereign rating upgrade and Nigeria’s removal from the FATF grey list further amplify this narrative. These are signs that the international community, which had grown increasingly wary of Nigeria’s macro-management, is beginning to acknowledge the reforms and policy consistency coming out of the Central Bank. In the world of global finance, credibility is currency, and Nigeria has begun to rebuild it in measurable ways.
On the domestic front, the banking system is experiencing its own transformation. The recapitalisation programme, which many initially viewed with scepticism, is now progressing at a pace that suggests strong industry alignment. With sixteen banks already meeting the revised capital requirements, the sector is visibly strengthening. This is important not only for regulatory compliance but for the stability of the entire financial system. A well-capitalised banking sector is the backbone of sustainable economic growth, as it ensures the capacity to absorb shocks, support credit expansion and maintain financial soundness. The MPC’s expression of satisfaction with the banking system is grounded in data, not mere optimism. Financial soundness indicators remain within regulatory thresholds, signalling that the system is stable, resilient and becoming better positioned to support the broader economy.
Economic activity is also responding to this emerging stability. GDP growth reaching 4.23 percent in the second quarter of 2025 shows that the recovery is not superficial. It is being driven by real output across multiple sectors. Even more compelling is the Purchasing Manager’s Index, rising to 56.4 in November, the highest level in five years. This means businesses are expanding, production is increasing, and confidence is returning to the private sector. Growth driven by optimism is more sustainable than growth driven by government intervention alone. It reflects increased investment appetite, improved planning horizons and stronger expectations for future stability.
Against this backdrop, the MPC’s decision to hold the rate at 27 percent is a strategic masterstroke. It signals that the Central Bank understands the importance of consistency in policy implementation. With inflation still high at double digits, relaxing now would risk reversing the gains of the past months. Nigeria has a history of premature policy easing, moments when economic managers loosened conditions at the slightest sign of progress, only to see inflation rebound with greater force. This time, the Bank has chosen discipline over populism, predictability over pressure and long-term stability over short-term applause. The slight adjustment to the corridor around the MPR also shows active management rather than rigidity. By carefully managing liquidity, the CBN is reinforcing control without shocking the system.
What is emerging from this MPC meeting is not just a decision but a doctrine, a new era of monetary policy anchored on consistency, data and credibility. The Bank is demonstrating that achieving price stability is not a one-off task but a continuous process that requires firmness, clarity and resilience. This is the foundation upon which sustainable growth can be built. Inflation is cooling. Reserves are rising. The naira is stabilising. Banks are strengthening. Businesses are expanding. Investor confidence is returning. The entire macroeconomic landscape is shifting in a direction that rewards discipline and punishes recklessness.
The strongest message from the MPC’s decision is unmistakable. Stability comes first. Nigeria cannot grow, attract capital, strengthen its currency or protect its citizens from rising prices without stability. For once, the Central Bank is acting like an institution fully aware of its power, its responsibility and its impact on the economic future of the country. If this trajectory continues, the conversation will soon shift from stabilising the economy to accelerating growth, from fighting inflation to boosting productivity, and from reacting to crises to shaping the future.
For now, holding the MPR at 27 percent is not only the right call; it is the necessary call for an economy that is finally regaining its balance.