Nigeria Holds Rates at 27.5% as Inflation Slows After Data Overhaul

BREAKING NEWSFebruary 24, 2025 at 9:43 AM UTC

TLDR

Nigeria’s central bank kept its benchmark interest rate at 27.5%
That marks a pause to a steep tightening cycle after a revamp in inflation data showed a slowdown
The monetary policy committee (MPC) has raised rates by 16 percentage points since 2022 to combat soaring inflation

Nigeria’s central bank kept its benchmark interest rate at 27.5%, pausing a steep tightening cycle after a revamp in inflation data showed a significant slowdown. Governor Olayemi Cardoso cited macroeconomic stability and a more stable naira as reasons for the decision.

The monetary policy committee (MPC) has raised rates by 16 percentage points since 2022 to combat soaring inflation and stabilize the naira, which lost 70% of its value in 2023 following currency reforms.

A revised inflation calculation by the statistics agency lowered annual inflation to 24.5% in January, down from 34.8% under the old method.

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Key Takeaways

Nigeria’s central bank is cautiously optimistic about its inflation fight but remains watchful of food price pressures. Analysts expect inflation to moderate in 2025, allowing for gradual rate cuts, potentially starting with a 100-basis-point reduction in May. The naira’s stability—trading between 1,470 and 1,550 per dollar—suggests economic confidence is improving. However, risks from U.S. trade policies and global inflation trends remain. The next MPC meeting in May will be critical in determining if monetary easing can begin, potentially reducing rates to 24.75% by year-end.

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