Introduction to Nigeria’s Economic Stability
Nigeria’s banking sector has demonstrated remarkable resilience in the face of global economic anxieties, including trade tensions and geopolitical uncertainties. The Central Bank of Nigeria’s (CBN) Monetary Policy Committee (MPC) has taken a steady and deliberate approach to stabilizing the national economy.
Maintaining the Monetary Policy Rate
The MPC voted to maintain the Monetary Policy Rate (MPR) at 27.0 percent. This decision reflects the careful balance required to sustain recent successes in managing inflation and exchange rate stability. The financial soundness indicators are within regulatory thresholds, and 16 banks have already met the new capital requirements as part of the ongoing recapitalization exercise.
Reasons for Retaining the MPR
One of the main reasons for retaining the MPR is the ongoing deceleration of inflation. Headline inflation has declined for seven consecutive months, dropping from 18.02 percent in September to 16.05 percent in October. Food inflation has also dropped significantly, from 16.87 to 13.12 percent in just one month. This trajectory is the result of deliberate, tight monetary policy aimed at prioritizing price stability.
Impact on the Economy
The decline in core inflation, which has dropped to 18.69 percent, indicates that the economy is responding positively to the Bank’s decisions. The external sector has also strengthened considerably, with foreign reserves rising to $46.70 billion by November 14, 2025. This level of reserves provides over 10 months of import cover, a remarkable buffer in a global economy characterized by supply chain fragilities.
Improved Investor Confidence
The improvement in the external sector is linked to several factors, including increased capital inflows, a stable exchange rate, and better current account performance. The CBN acknowledges the collaborative role of fiscal policy actors, and Nigeria’s recent upgrade by major credit rating agencies and its removal from the FATF grey list underscore the reforms occurring across various institutions. Investor confidence, once affected by volatility and policy uncertainties, is gradually being restored.
Conclusion
In conclusion, the MPC’s decision to maintain a stable monetary environment despite global challenges is designed to preserve the momentum of economic growth. With stronger banks, credit allocation is expected to improve, helping SMEs, manufacturers, and critical sectors obtain financing at more predictable rates as macroeconomic stability deepens. Nigeria’s growth numbers show positive results, with real GDP expanding by 4.23 percent in Q2 2025, and the Purchasing Managers’ Index (PMI) surging to 56.4 in November, the highest level in five years. Retaining the MPR at 27 percent sends a clear message, one that anchors expectations and reinforces policy continuity at a critical time.
