CBN Maintains 27% Rate Amid Economic Transmission Challenges

In November 2025, the Central Bank of Nigeria (CBN) held its 303rd Monetary Policy Committee meeting, deciding to maintain the monetary policy rate (MPR) at 27%. This decision reflects a highly restrictive stance as Nigeria enters the new year, with headline inflation recorded at 14.45% year-on-year in November 2025.

The article highlights a growing disconnect between policy intent and economic outcomes, referencing economic theories from John Maynard Keynes and Milton Friedman. Despite the high interest rates aimed at reducing inflation, structural issues such as food price volatility, supply chain disruptions, and a weak exchange rate continue to exert pressure on the economy.

The commercial lending rate has climbed even higher, with banks preferring to place funds with the central bank rather than extend credit, leading to a significant rise in central bank deposits. This tightening of credit conditions poses challenges for small and medium-sized enterprises, which face prohibitively expensive borrowing costs.

The article emphasizes the need for coordinated monetary policy and structural reforms to address the underlying causes of inflation.