By Dayo Omoogun
The Central Bank of Nigeria’s Monetary Policy Committee held its 300th meeting which lasted two days from Monday 19th May, 2025 to Tuesday 20th May, 2025 where it agreed, once again, that the Monetary Policy Rate and other parameters be retained as they are viz: the Monetary Policy Rate (MPR) at 27.50 percent, asymmetric corridor around the MPR at +500/-100 basis points, Cash Reserve Ratio (CRR) at 50%/16 % for Deposit Money Banks and Merchant Banks respectively as well as keeping the Liquidity Ratio (LR) at 30.00 percent.
It is noteworthy that the decision to retain all parameters was unanimous. The truth is that most economists and analysts actually expected, and in some cases, predicted this stay of parameters. In actual fact, Dr. Samson Simon the Chief Economist at ARKK Economics and Data Limited, did predict this possibility as far back as March 1, 2025 in the course of reviewing the decision of the MPC to retain the MPR and co at their 299th meeting in February, 2025.In his words at the time, “for the next MPC meeting, the situation will largely be the same as the last one”.
It is time tested wisdom to not change a wnning team and by extension in this case, there is no need to change a winning strategy. As Americans would say, “if it ain’t broke, don’t fix it.
The Governor of the Central Bank of Nigeria who doubles as the Chair of the Committee said , among other things that “the MPC noted the relative improvements in some key macroeconomic indicators which are expected to support the overall moderation of prices in the near to medium term. These include the progressive narrowing of the gap between the Nigerian Foreign Exchange market ( NIFEM) and the Bureau de Change ( BDCs) windows, the positive Balance of Payments (BOP) position and the easing price of PMS”.
The Governor alluded to the stability of the exchange rate as one of the factors considered for retaining the parameters. This position is quite understandable as stability or the lack of it, is a key factor for investment decisions.It will not be out of place here to give credit to whom it is due by applauding the consistent pursuit of traditional monetary policy strategies which is producing the relative stability we currently enjoy.
Inflation was also considered in reaching the decision as the MPC believes that inflation has reduced. Since the situation is not worsening, it makes sense to retain the parameters to see if further improvements can be achieved. In some quarters however, the claim of reduced inflation is debatable though as they opine that the reduced inflation figures arose as a result of the new base year used in rebasing the economy and differs from the reality on the streets/markets.
Usually, in taking a stand on these matters both the local turf and foreign field are surveyed especially now that the world has become a global village. Some of the trending international scenarios that were factored into this decision are the trade war being promoted by American President Donald Trump’s policy on tariffs, the on- going efforts aimed at ending the Russia- Ukraine war,etc.
The most important point that must not be missed by all in all of this is that the financial world is a delicate one where little action or inaction could trigger a deluge of unexpected or unwanted consequences therefore “if it ain’t broke why fix it?”
Our hope and prayers must be that the world or our country will not experience any disruptive occurrence that throws a spanner in the works.
In conclusion, without mincing words the MPC has been consistently choosing right as the outcomes have been showing. The CBN and indeed the MPC deserve commendation for choosing the right tools and strategies that have continued to inspire confidence, promote stability, engender growth and drive a return to a good standing in the comity of nations.