Report on the Activities of the Monetary Policy Committee (MPC) in 2025, Outcomes and Outlook for 2026
1.0 Key Global and Domestic Economic Developments In 2025
Monetary policy in 2025 was shaped by key developments in the global and domestic economic and financial environments.
1.1 Key Global Developments
On the global scene, output in 2025 was resilient but weak as the world economy navigated persistent fragilities. The IMF in its October 2025 World Economic Outlook (WEO) Report, projected a moderation to 3.2 per cent from 3.3 per cent in 2024. Growth was weighed down by persistent uncertainty, geopolitical tensions, tariff war and rising protectionism, which disrupted global supply chains and dampened trade and investment flows. At the same time, fiscal vulnerabilities and financial market fragilities constrained policy space and heightened downside risks. Temporary drivers of early‑year activity, such as front‑loaded production and trade, faded, while structural challenges, including labour supply constraints, added further headwinds. Overall, growth momentum remained fragile, with the balance of risks firmly tilted to the downside.
Global inflation was projected to decline to 4.2 per cent in 2025 and 3.7 per cent in 2026 (IMF WEO, 2025). The expected trajectory in inflation is hinged on the back of the combined impact of past monetary tightening and softening commodity prices. Inflation is, however, expected to remain above pre-Pandemic levels in the near term.
1.2 Key Domestic Developments
Domestic output growth remained resilient, though still vulnerable. The economy continued to grapple with persistent structural challenges including security constraints and infrastructure deficits, which limited the effectiveness of monetary policy and slowed progress toward a broad-based recovery. Additional pressures stemmed from elevated though moderating inflation, constrained fiscal space, and rising public debt driven by weak revenue performance.
GDP growth moderated to 3.98 per cent in third quarter of 2025, from 4.23 per cent in second quarter of 2025. The growth was driven by the non-oil sector and supported by stable exchange rate, moderating inflation, capital inflows and strong reserve position amidst the lingering structural bottlenecks. Domestic inflation declined to 15.15 per cent in December 2025, from 34.80 per cent in December 2024, attributable to the sustained tight stance of monetary policy, stable exchange rate and improved agricultural production.
2.0 Considerations of the MPC
Throughout 2025, the Monetary Policy Committee (MPC) of the Central Bank of Nigeria undertook a comprehensive assessment of global and domestic macroeconomic developments, with a focus on sustaining the disinflation process, preserving financial stability, and supporting a gradual economic recovery.
A central focus for the MPC during the year was to address the high level of inflation. By end 2025, headline inflation declined considerably, reflecting the cumulative impact of a tight monetary policy stance, relatively stable exchange rate conditions, increased capital inflows, and improved food supply dynamics. Despite this favourable trend, the Committee underscored that inflation remained elevated and stressed the need for continued policy vigilance to firmly anchor expectations and consolidate the gains achieved in reducing price pressures.
The MPC also closely monitored exchange rate developments and external sector indicators, noting improvements in external reserves, the emergence of a surplus current account balance, and strengthening investor confidence. These positive outcomes contributed significantly to easing inflationary pressures and enhancing overall macroeconomic stability. Also, the upgrade of Nigeria’s sovereign credit rating and the country’s removal from the Financial Action Task Force (FATF) grey list strengthened external financing conditions and enhanced capital inflows.
The management of banking system liquidity remained a prominent consideration throughout the year. The Committee highlighted persistent excess liquidity in the banking system, partly driven by increased fiscal releases. In response, the Bank actively deployed liquidity mopping instruments, including adjustments to the Cash Reserve Ratio (CRR), and the Standing Facilities Corridor. A notable decision in the course of the year was the introduction of a 75 per cent CRR on non-TSA public sector deposits in September 2025, aimed at reinforcing liquidity control and strengthening monetary policy effectiveness.
In its review of the global economic environment, the Committee noted several external headwinds, including rising protectionism, diverging international monetary policy stances, subdued global demand, and commodity price volatility. These external dynamics informed the MPC’s view that a tight but flexible monetary policy stance was necessary to mitigate imported inflation risks and safeguard domestic financial system resilience
By the close of 2025, the Committee observed that the tightening cycle had begun to yield tangible macroeconomic benefits, including declining inflation, improved foreign exchange market liquidity, and enhanced investor confidence. Nevertheless, it emphasized the importance of maintaining policy consistency to sustain these gains. These considerations collectively underpinned decisions in 2025 to maintain or cautiously adjust key monetary parameters, including the Monetary Policy Rate (MPR), CRR, liquidity ratio, and asymmetric corridor, to sustain the path toward macroeconomic stability.
3.0 Monetary Policy Decisions in 2025
In 2025, the Monetary Policy Committee (MPC) of the Central Bank of Nigeria convened five times, in February, May, July, September and November, to assess domestic and global economic developments and determine policy actions needed to maintain macroeconomic stability. The year opened with a firm continuation of the tight monetary stance adopted in the preceding year.
At the February meeting, the Committee voted unanimously to retain all policy parameters. The Monetary Policy Rate (MPR) remained at 27.50 per cent, the asymmetric corridor was held at +500/–100 basis points, the Cash Reserve Ratio (CRR) stayed at 50 per cent for Deposit Money Banks and 16 per cent for Merchant Banks, while the Liquidity Ratio was maintained at 30 per cent. This decision reflected the Committee’s commitment to price stability in the face of persistent inflationary pressures even as the foreign exchange market showed signs of stability.
The cautious approach continued in the May and July meetings, where all parameters were kept unchanged. There was however a shift in the September meeting, where the monetary policy stance was eased slightly in response to sustained disinflation observed over five consecutive months and improved macroeconomic fundamentals. The Committee reduced the MPR by 50 basis points to 27.00 per cent and recalibrated the Standing Facilities corridor to +250/–250 basis points. It also lowered the CRR for commercial banks from 50 per cent to 45 per cent, retained 16 per cent for Merchant Banks, and introduced a new 75 per cent CRR on non‑TSA public sector deposits to strengthen liquidity management.
At its final meeting of the year in November 2025, the MPC maintained all the parameters at the levels set in September except for the Standing Facilities corridor, which was adjusted further to +50/–450 basis points. The decision followed continued deceleration in headline inflation through October, marking seven consecutive months of improvement. The Committee reiterated that although inflation was easing, it remained elevated, and sustaining tight monetary conditions was necessary to consolidate progress. A summary of the MPC attendance and policy decisions of the MPC in 2025 is contained in Table 1 and 2 respectively.
4.0 Outcomes of Monetary Policy Decisions in 2025
The monetary policy stance adopted by the Committee in 2025 produced measurable macroeconomic outcomes, particularly in price stability, foreign exchange market functioning, and financial system resilience.
Most notably, disinflation gained momentum over the course of the year. Headline inflation declined from 34.80 per cent in December 2024 to 15.15 per cent in December 2025. The moderation reflects the cumulative impact of sustained monetary tightening, improved exchange rate stability, and a gradual easing of food price pressures. Monthly inflation dynamics also softened materially toward year-end, indicating that price pressures are waning.
Conditions in the foreign exchange market equally improved significantly. Greater transparency, enhanced liquidity, and policy coordination helped to narrow distortions across market segments. The Bank completely cleared FX backlog of US$7 billion, restoring credibility and allowing firms to plan better. Convergence between the official market and parallel market rates strengthened confidence, while inflows increased in response to improved market pricing and credibility. The spread between the Nigerian Foreign Exchange Market (NFEM) and Bureau de Change (BDC) rates remained below 5 per cent for much of the period, signalling reduced segmentation and improved price discovery.
External buffers also showed early signs of recovery. Reserve accretion during the year strengthened the economy’s capacity to withstand external shocks and contributed to exchange rate stability. The rebuilding of reserves, alongside improved FX liquidity conditions, reinforced market confidence in macroeconomic management.
External buffers also improved significantly. Gross external reserves have rose above US$45 billion, the highest level since 2018. This accumulation provides meaningful resilience against external shocks, supports exchange rate stability, and strengthens policy credibility.
Importantly, fiscal–monetary coordination improved during the year. Greater alignment between fiscal consolidation efforts and monetary tightening enhanced overall policy credibility, reduced uncertainty, and supported macroeconomic stabilization. The consistency of reform messaging and implementation helped anchor expectations in both domestic and international markets.
Investor sentiment improved materially during the year, as reflected in assessments by major international institutions. In May 2025, Moody’s upgraded Nigeria’s sovereign rating to B3 from Caa1, citing significant improvements in the country’s external and fiscal positions. This followed earlier upgrade by Fitch Ratings of Nigeria’s Long‑Term Foreign Currency Issuer Default Rating (IDR) from B‑ to B and assigned a Stable Outlook, while acknowledging Government’s commitment to exchange rate liberalisation, monetary policy tightening, amongst others. In July 2025, Bloomberg reported increasing stability in the naira, noting signs of decoupling from oil price volatility amid strengthening reforms and investor confidence. The IMF’s July 2025 Article IV Consultation report similarly acknowledged that Nigeria’s reform momentum had enhanced macroeconomic stability and resilience, thereby strengthening investor confidence, and positioning the economy to better withstand external shocks.
Further reinforcing credibility, Nigeria was removed from the Financial Action Task Force (FATF) grey list during the year, reflecting international confidence in Nigeria’s strengthened AML/CFT frameworks and compliance with FATF standards as well as improvements in regulatory oversight.
Overall, the outcomes of monetary policy decisions in 2025 demonstrate that disciplined monetary policy stance, reinforced by structural and institutional reforms, contributed meaningfully to macroeconomic stabilization, improved market functioning, and strengthened policy credibility.
5.0 Outlook for Monetary Policy for Nigeria in 2026
Nigeria enters 2026 on a stronger macroeconomic footing than a year earlier. The disinflation process is firmly underway, with headline inflation easing to 15.15 per cent in December 2025. The moderation has been supported by declining food prices, improved exchange rate stability, and a reduction in monthly inflation momentum. The cumulative impact of sustained tightening, alongside improved FX market functioning, has strengthened price stability dynamics.
Despite these gains, vulnerabilities persist. Election-related liquidity injections, fiscal execution risks, and structural rigidities in food and energy markets could challenge the disinflation trajectory. Supply-side constraints remain an important source of inflation risk, underscoring the need for continued coordination between monetary and fiscal policies.
In this context, monetary policy in 2026 is expected to remain disinflation-focused and state-contingent. The priority will be to consolidate price stability gains and firmly anchor inflation expectations. It is important to note that while, Nigeria’s macroeconomic trajectory is improving, consolidation of these gains requires sustained policy discipline, institutional credibility, and continued reform momentum. Stabilization is not a moment; it is a process. The Committee’s posture in 2026 will therefore remain cautious, data-driven, and aligned with its core objective of price stability.
Table 1: Monetary Policy Committee (MPC) Meeting Attendance in 2025 |
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S/N |
Members |
Number of Meetings Attended |
1. |
Olayemi Cardoso |
5 out of 5 |
2. |
Bala Moh’d Bello |
5 out of 5 |
3. |
Muhammad S. Abdullahi |
5 out of 5 |
4. |
Philip Ikeazor |
5 out of 5 |
5. |
Emem Usoro |
5 out of 5 |
6. |
Murtala S. Sagagi |
5 out of 5 |
7. |
Jafiya L. Shehu |
5 out of 5 |
8. |
Lamido A. Yuguda |
5 out of 5 |
9. |
Bandele A. G. Amoo |
5 out of 5 |
10. |
Aloysius U. Ordu |
5 out of 5 |
11 |
Mustapha Akinkunmi |
5 out of 5 |
12 |
Aku P. Odinkemelu |
5 out of 5 |
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Table 2: MPC Decisions in 2025 |
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Date |
Indicators |
Decisions |
|
February 19 and 20, 2025 Communiqué No. 156 |
Ø GDP 2024Q3: 3.46% Ø Inflation: 24.48% Ø Crude oil price: US$76.86 Ø Exchange Rate: N1,499.78/U$ Ø M3: -1.87% Ø NPLs: 4.2% Ø MPR: 27.50% |
Ø Retained the MPR at 27.50 per cent. Ø Retained the Asymmetric corridor at +500 and -100 basis points around the MPR. Ø Retained the CRR at 50 per cent and 16 per cent for Deposit Money Banks and merchant banks, respectively. Ø Retained the Liquidity Ratio at 30.0 per cent. |
|
May 19 and 20, 2025 Communiqué No. 157 |
Ø GDP 2024Q4: 3.84% Ø Inflation:23.71% Ø Crude oil price: US$61.29 Ø Exchange Rate: N1,596.69/US$ Ø M3: 0.77% Ø NPLs:5.6% Ø MPR: 27.50% |
Ø Retained the MPR at 27.50 per cent. Ø Retained the Standing Facilities corridor at +500 and -100 basis points around the MPR. Ø Retained the CRR at 50 per cent and 16 per cent for Deposit Money Banks and merchant banks, respectively. Ø Retained the Liquidity Ratio at 30.0 per cent. |
|
July 21 and 22, 2025 Communiqué No. 158 |
Ø GDP 2025Q1: 3.13% Ø Inflation:22.22% Ø Crude oil price: US$74.83 Ø Exchange Rate: N1,535.82/U$ Ø M3: 43.65% Ø NPLs: 5.63% Ø MPR: 27.50% |
Ø Retained the MPR at 27.50 per cent. Ø Retained the Standing Facilities corridor at +500 and -100 basis points around the MPR. Ø Retained the CRR at 50 per cent and 16 per cent for Deposit Money Banks and merchant banks, respectively. Ø Retained the Liquidity Ratio at 30.0 per cent |
|
September 22 and 23, 2025 Communiqué No. 159 |
Ø GDP 2052Q2: 4.23% Ø Inflation: 20.52% Ø Crude oil price: US$69.99 Ø Exchange Rate: N1,530.25/US$ Ø M3: 5.44% Ø NPLs: 7.60% Ø MPR: 27.50% |
Ø Reduced the MPR to 27.00 per cent. Ø Adjusted the Standing Facilities corridor to +250/-250 basis points around the MPR. Ø Adjusted the CRR for Deposit Money Banks to 45 per cent, while retaining that of merchant banks at 16 per cent; introduced a 75 per cent CRR in non-TSA public sector accounts. Ø Retained the Liquidity Ratio at 30.0 per cent |
|
November 24 and 25, 2025 Communiqué No. 160 |
Ø GDP 2025Q2: 4.23% Ø Inflation: 16.05% Ø Crude oil price: US$64.61 Ø Exchange Rate: N1,448.03/US$ Ø M3: 5.01% Ø NPLs: 7.74% Ø MPR: 27.00% |
Ø Retained the MPR to 27.00 per cent. Ø Adjusted the Standing Facilities corridor to +50/-450 basis points. Ø Retained the CRR at 45 per cent for Deposit Money Banks; 16 per cent for merchant banks; and 75 per cent for non-TSA public sector accounts Ø Retained the Liquidity Ratio at 30.0 per cent; and |