Personal Statements of MPC Members for the 300th Meeting of the Monetary Policy Committee (MPC)

Date: Tuesday, 20 May 2025

Ref: CBN/MPC/COM/157/300

Attention: News Editors/Gentlemen of the Press

MONETARY POLICY RATE RETAINED AT 27.50 PER CENT CENTRAL BANK OF NIGERIA

The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) held its 300th meeting on the 19th and 20th of May 2025. The Committee reviewed developments in the global and domestic economies including the risks to the outlook. All twelve members of the Committee were in attendance

Decisions of the MPC

The Committee was unanimous in its decision to hold policy and thus decided as follows:

1. Retain the MPR at 27.50 per cent.

2. Retain the asymmetric corridor around the MPR at +500/-100 basis points.

3. Retain the Cash Reserve Ratio of Deposit Money Banks at 50.00 per cent and Merchant Banks at 16 per cent.

4. Retain the Liquidity Ratio at 30.00 per cent.

Considerations

The MPC noted the relative improvements in some key macroeconomic indicators which are expected to support the overall moderation in prices in the near to medium term. These include the progressive narrowing of the gap between the Nigeria Foreign Exchange Market (NFEM) and Bureau De Change (BDC) windows, the positive balance of payments position, and easing price of PMS. Members also noted with satisfaction the progressive moderation in food inflation and, therefore, commended the government for implementing measures to increase food supply as well as stepping up the

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fight against insecurity, especially in farming communities. The MPC, thus, encouraged security agencies to sustain the momentum while government provides necessary inputs to farmers to further boost food production.

The Committee, however, acknowledged underlying inflationary pressures driven largely by high electricity prices, persistent foreign exchange demand pressure and other legacy structural factors. The MPC noted new policies introduced by the Federal Government to boost local production, reduce foreign currency demand pressure, and thus, lessen the pass-through to domestic prices.

Given the relative stability observed in the foreign exchange market, Members urged the Bank to sustain the implementation of the ongoing reforms to further boost market confidence. The Committee also called on the fiscal authority to strengthen current efforts at enhancing foreign exchange earnings, especially from gas, oil and non-oil exports.

The MPC, however, expressed concerns about the recent decline in crude oil prices, attributable to increased production by non-OPEC members as well as uncertainties associated with U.S. trade policy, which present new challenges for fiscal receipts and budget implementation.

The Committee reaffirmed the continued stability of the banking system following notable improvements in key performance indicators and observed the appreciable progress in the ongoing recapitalization exercise. Members, thus, called on the Bank to sustain its effective oversight of the industry to ensure compliance with regulatory and macroprudential guidelines.

On the strength of these considerations, and driven by the continued uncertain policy environment, exacerbated by ongoing global shocks, members weighed the available policy options and were unanimous in their decision to hold policy to enable a better understanding of near-term developments. Members reaffirmed their commitment to prioritise policies targeted at anchoring inflation expectations and easing exchange rate pressure.

Key Developments in the Domestic and Global Economies

According to the National Bureau of Statistics (NBS), headline inflation (year- on-year) declined to 23.71 per cent in April 2025, compared with 24.23 per cent in March 2025. On a month-on-month basis, it also declined to 1.86 per cent in April 2025, from 3.9 per cent in the previous month.

Both food and core components contributed to the decline in inflation in the period. Food inflation eased further to 21.26 per cent in April 2025 from 21.79 per cent in the previous period. Core inflation also declined to 23.39 per cent in April 2025, compared with 24.43 per cent in March.

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Real GDP (year-on-year) grew by 3.84 per cent in the fourth quarter of 2024, compared with 3.46 per cent in the preceding quarter. This improvement was driven by both the oil and non-oil sectors, with the services sector being the major contributor.

Gross external reserves increased by 2.85 per cent to US$38.90 billion as at 16th May 2025, from US$37.82 billion at end-March 2025. This represents an import cover of 7.6 months for goods and services. The balance of payments (BOP) recorded a surplus of US$1.10 billion in the fourth quarter of 2024, compared with US$4.21 billion in the preceding quarter, on account of moderation in current account surplus.

Although global output growth is expected to remain positive despite existing and emerging headwinds, the International Monetary Fund (IMF) downgraded its global growth forecast to 2.8 per cent in 2025 and 3.0 per cent in 2026, compared with 3.3 per cent in 2024 due to the uncertain policy environment.

Members were, thus, unanimous in their resolution to maintain close surveillance of developments in both the domestic and global environments to enable appropriate policy response to emerging shocks.

The next meeting of the Committee is scheduled to hold on the 21st and 22nd of July 2025.

Thank you.

Olayemi Cardoso

Governor, Central Bank of Nigeria 20th May 2025.

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PERSONAL STATEMENTS BY

THE MONETARY POLICY COMMITTEE MEMBERS

MPC MEETING MAY 19 – 20, 2025

1. AKU PAULINE ODINKEMELU

I vote to retain the Monetary Policy Rate (MPR) at 27.50 per cent, the asymmetric corridor around the MPR at +500/-100 basis points, Cash Reserve Ratio of Deposit Money Banks at 50.00 per cent and Merchant Banks at 16 per cent, and the Liquidity Ratio at 30.00 per cent. My decision is influenced by the following developments:

Global Economic Developments

Global economic prospects continue to weaken due to geopolitical tension such in the Middle East, the Russia-Ukraine conflicts, pervasive policy uncertainty which diminishes market confidence, tight financial conditions, and escalating trade war between the United States and its major trading partners. Theoretically, trade war, especially, in a form of tariff hike is a source of supply shock to the global economy with the attendant loss of productivity due to resource reallocation to non-competitive goods. According to the International Monetary Fund (IMF)'s World Economic Outlook of April 2025, the US tariff hike and countermeasures by their trading partners have pushed US and global tariff rates to ‘centennial highs'.

Regrettably, this evolves at a time the world has made significant progress in integrating the financial sector and supply chain. Though, the scheduled tariff hike is currently on pause, the headwinds are projected to slow down global output. The IMF outlook for April 2025 projects global growth slowing to 2.8 per cent in 2025 and 3.0 per cent in 2026 from 3.3 per cent in 2024. The slowdown is expected to manifest more in developed economies like the United States, Canada, Mexico, and China, with downward adjustments to other economies too. Growth in Advanced Economies is projected to moderate from 1.8 per cent in 2024 to 1.4 and 1.5 per cent in 2025 and 2026, respectively. Growth in Emerging Markets and Developing Economies (EMDES) is also expected to moderate from 4.3 per cent in 2024 to 3.7 and 3.9 per cent in 2025 and 2026, respectively. Growth forecast for Sub-Saharan Africa was also revised downward to 3.8 per cent in 2025 from 4.0 per cent in 2024, with expected recovery to 4.2 per cent in 2026.

Global inflation is projected to sustain its decline and ultimately converge back to the central banks of the Advanced Economies's targets of 2.2 per cent in 2026, due to expected easing of supply chain disruptions, fall in

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energy prices, and labour market normalisation. Global inflation is projected to moderate from 5.7 per cent in 2024 to 4.3 and 3.6 per cent in 2025 and 2026, respectively. This is slightly higher than the January 2025 outlook due to the increasing upside risks to inflation. The Advanced Economies inflation is forecast to moderate from 2.6 per cent in 2024 to 2.5 and 2.2 per cent in 2025 and 2026, respectively. The Emerging Markets and Developing Economies inflation is also projected to sustain its descent from 7.7 per cent in 2024 to 5.5 and 4.6 per cent in 2025 and 2026, respectively. The upside risks to inflation in these economies remain the factors I highlighted in my February 2025 Statement such as exchange rate pressures, inadequate transport infrastructure, energy shortages, geopolitical tension, and climate risks.

I, therefore, vote to hold interest rate while encouraging the Bank to remain vigilant in monitoring the potential implication of the trade tension and declining global inflation on the domestic economy in terms of the trade costs and inflationary pressure. The declining domestic inflation and more stable exchange rate has afforded the Bank the rare privilege of effectively anchoring inflation expectation and promoting price stability during this period of heightened global uncertainty.

Domestic Economic Developments and Outlook

The domestic economy expanded by 3.84 per cent (year-on-year) in the last quarter of 2024 from 3.46 per cent in the preceding quarter. The drivers of the growth are the services, industry, and agricultural sectors. Though positive, growth is still fragile and subdued consumer demand and elevated interest rates pose significant risks to the Nigeria's economy. The Bank needs to keep reviewing its tools to effectively transmit monetary policy.

Year-on-Year headline inflation declined to 23.71 per cent in April 2025 from 24.23 per cent in March 2025. The decline in inflation is attributed to average decline in food inflation - Maize (Corn) Flour, Wheat Grain, Okro Dried, Yam Flour, Soya Beans, Rice, Bambara beans, Brown Beans – and core inflation.

Other factors that weighed on my decision are as follows:

There is a need to monitor the outlook to domestic inflation, which is projected to decline gradually due to improved economic and exchange rate stability, relatively lower PMS prices, and the government temporary waiver on import duties and levies on several essential food items. There is no better time than now to sustain the easing of the inflationary pressure. The monetary and fiscal authorities, therefore, must continue to strengthen collaboration in order to find lasting solutions to food prices. While I applaud the waiver of duties and levies on essential food items, the effect is transitory and must be properly managed. Decisive and urgent policy action is

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required to stimulate domestic production, which is effective in anchoring long-term inflation expectation.

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2. ALOYSIUS UCHE ORDU

Global Economic Developments: The May 2025 MPC meeting took place against the backdrop of the U.S. President's "Liberation Day Tariff," with consequential implications for the global trading system. Designed as a sweeping tariff targeting key imports from strategic economic rivals, particularly China, the measure aimed to reinvigorate domestic manufacturing and signal a hardline nationalist economic agenda. Some of the tariff increases were temporarily paused, though still well above previouUS levels and the future tariff decisions remained highly unpredictable.

In practice, the tariff disrupted international supply chains, raised input costs for U.S. manufacturers, and sparked retaliatory measures from affected trading partners. These developments intensified trade tensions, increased market volatility, and complicated recovery efforts in a global economy still grappling with post-pandemic inflationary pressures and geopolitical tensions in Europe and the Middle East.

As a consequence, the Peterson Institute for International Economics projected a significant deterioration in the global economic outlook. Global GDP growth is projected to slow to 2.7% in 2025 and 2.8% in 2026, down from 3.2% in 2024. This slowdown primarily results from the policy uncertainty that has made it challenging for businesses to plan and invest, further dampening economic activity.

In the U.S., economic growth is expected to stall, and projected to decline from 2.5% in 2024 to just 0.1% in 2025. Inflation is anticipated to peak at around 4.5% later in the year, and unemployment is expected to rise slightly above 5% before improving in 2026. Financial markets have reacted negatively to these policy changes, although consumer spending and employment data remain relatively stable, possibly due to households and businesses accelerating purchases in anticipation of higher prices on account of the new tariffs regime.

In its May 2025 meeting, the Fed kept US interest rates on hold at 4.25% to 4.5% for the third consecutive meeting. The decision was based on the heightened uncertainty with both sides of the Fed's dual mandate to foster maximum employment and to tame inflation — seriously challenged. It noted that the risks of higher unemployment and higher inflation had increased since its last meeting in March.

Outside the U.S., the economic picture is mixed. Canada and Mexico are experiencing significant impacts from new U.S. trade actions, with Mexico facing additional challenges from weaker economic fundamentals and potential revisions to the trade pact between the three countries the

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USMCA. In Europe and the UK, moderate growth is expected, supported by coordinated debt issuance and increased defense spending.

Implications for Emerging Market Economies: For emerging market and developing economies, the IMF's April 2025 World Economic Outlook projects growth of 3.7% in 2025, a slight decrease from previous years. This slowdown is a consequence of the heightened global trade tensions which have disrupted supply chains and dampened investor confidence. Additionally, tighter global financial conditions have led to increased borrowing costs, posing challenges for the EMDEs with significant external debts. Despite these headwinds, these economies are still expected to outpace advanced economies, which are forecast to grow at 1.4% in 2025.

However, within emerging market economies, regional performances vary. India remains an outlier with a robust growth projection of 6.5% for 2025, driven by strong domestic demand, infrastructure investments, and digital advancements.

In contrast, China's growth is expected to moderate to 4.0%, hindered by weak household consumption, a sluggish property sector, and the adverse effects of trade policy developments. In view of softening demand, China eased monetary policy – cutting its benchmark interest rate on May 7, the same day that the US Fed held interest rates steady. The Chinese government also increased liquidity by reducing the amount of money banks are required to hold in capital reserves.

Other Southeast Asian countries are anticipated to benefit from trade reorientation and regional supply chain shifts, while Latin America and Sub- Saharan Africa face more modest growth prospects due to debt vulnerabilities and low productivity.

Domestic Developments in Nigeria: CBN Staff economic report for the 300th MPC meeting and the World Bank's Nigeria Development Update provide detailed overview of recent domestic developments. Nigeria's economic performance has improved modestly, driven primarily by strong growth in the services sector, especially ICT and finance, and a recovery in oil production. Real GDP grew by 3.4% in 2024 and is projected to reach 3.7% in 2025.

However, growth remains uneven, with agriculture still lagging due to insecurity and high input costs. The Purchasing Managers' Index (PMI) readings suggest continued expansion in business activity into early 2025 (52.3 index points in March versus 51.4 in February), reflecting moderate optimism among firms despite persistent challenges. Government has largely maintained a stable macroeconomic policy mix, which has helped stabilize

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the economy, though challenges remain in ensuring that growth is inclusive and sustainable.

Monetary policy has remained tight in response to persistent inflation, which, despite easing slightly, remains elevated and sticky. In particular, month-to- month inflation was 24.48% in January 2025; it eased slightly to 23.18% in February; it edged up again to 24.23% in March; and eased a bit in April. Overall, inflation is projected to average 22.1% in 2025.

The financial and monetary sectors showed signs of tightening liquidity. Broad money growth moderated, and private sector credit experienced a marginal decline. The monetary base contracted, partly due to restrained central bank liquidity injections and increased cash reserve requirements. Money market rates trended upward, aligning more closely with the monetary policy rate, indicating improved transmission of policy decisions. The stock market performed positively, supported by foreign portfolio inflows and improved investor sentiment following foreign exchange reforms.

Nigeria's external sector exhibited notable resilience in early 2025, as detailed in the CBN Staff reports. Gross external reserves increased by 2.85% to US$38.90 billion as of May 16, 2025, up from US$37.82 billion at the end of March 2025. This level of reserves provides an import cover of approximately 7.6 months for goods and services, indicating a relatively strong buffer against external shocks

The balance of payments recorded a surplus of US$1.10 billion in the fourth quarter of 2024, a decline from the US$4.21 billion surplus in the preceding quarter. This moderation was primarily due to a decrease in the current account surplus, reflecting changes in trade dynamics and external economic conditions.

In the foreign exchange market, the naira demonstrated relative stability, attributed to the CBN's implementation of market-reflective exchange rate policies. These measures have contributed to the narrowing of the gap between official and parallel market rates, enhancing investor confidence, and promoting transparency in the forex market. The CBN's continued efforts to bolster market liquidity and maintain exchange rate stability are key to sustaining external sector resilience.

On fiscal policy, CBN Staff assessments reflect continued improvement in Nigeria's fiscal position, supported by increased revenue mobilization efforts and enhanced oil receipts. Total federally collected revenue rose during the review period, driven by improved performance in both oil and non-oil sectors. Higher crude oil prices and stable production levels boosted oil

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revenue, while non-oil revenue gains were attributed to reforms in tax administration and enforcement, including improvements in VAT and company income tax collections.

Expenditure levels also rose, largely due to increased recurrent spending, particularly on wages, interest payments, and security-related expenses. Although capital expenditure saw a slight uptick, it remains constrained by limited fiscal space. The resulting fiscal deficit, while still present, was narrower than in previous periods, reflecting improved revenue performance and tighter control over discretionary spending. The government continued to rely heavily on domestic borrowing to finance the deficit, leading to a rise in public debt levels.

Despite the improved fiscal outlook, structural challenges persist such as low revenue-to-GDP ratio, inefficient spending, and a growing debt service burden. The fiscal authorities are encouraged: (a) to sustain ongoing reforms aimed at broadening the tax base, enhancing public financial management, and promoting fiscal transparency; (b) to strengthen fiscal buffers and improve the efficiency of public spending; and (c) to revisit the 2025 budget parameters (e.g., oil production of 2.0 million barrels per day and crude price of US$75 per barrel) which are no longer realistic under the current circumstances.

Overall, there has been noteworthy improvements in the economy in the recent past. The gap between the official and parallel foreign exchange markets has narrowed; external reserves have increased; and headline inflation declined in April. And, on account of the improving macroeconomic fundamentals, Nigeria's credit rating has been upgraded.

Nevertheless, global economic developments, marked by heightened trade tensions, rising geopolitical uncertainty, and tighter global financial conditions pose significant challenges for Nigeria's macroeconomic stability and growth outlook. With global output growth projected to slow and trade volumes under pressure, Nigeria's export revenues, especially from oil, face downside risks, which could constrain foreign exchange earnings and fiscal revenues. And, inflation remains a major concern.

Therefore, we need to remain vigilant and monitor the data, especially at this time of heightened global uncertainty. I vote to hold the MPR, the CRR, the Asymmetric corridor and the liquidity ratio at their current levels.

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3. BALA MOH'D BELLO MON

Opening Statement

At the 300th Monetary Policy Committee (MPC) meeting, which was held on May 19 and 20, 2025, I voted to hold all policy rates at their current levels as follows:

1. Retain the Monetary Policy Rate (MPR) at 27.50 per cent.

2. Retain the asymmetric corridor around the MPR at +500/-100 basis points.

3. Retain the Cash Reserve Ratio of Deposit Money Banks at 50.00 per cent and Merchant Banks at 16 per cent.

4. Retain the Liquidity Ratio at 30.00 per cent.

My decision to hold all the policy rates is hinged on the need to continue monitoring and evaluating unfolding global economic developments. The evolving dynamics of global trade, financial markets, and persistent geopolitical tensions necessitate a cautious and evidence-based approach. Notably, the Nigerian economy remains resilient as key macroeconomic indicators continue to move broadly in the desired direction with a positive short-to-medium term outlook, despite persistent shocks.

Key Considerations

Recent data from the National Bureau of Statistics (NBS), indicate a moderation in inflationary pressures. Headline inflation (year-on-year) declined to 23.71 per cent in April 2025, from 24.23 per cent in the preceding month. On a month-on-month basis, inflation also decelerated to 1.86 per cent in April 2025, from 3.9 per cent in March. Both food and core components also moderated, with food inflation easing to 21.26 per cent in April 2025 from 21.79 per cent in March and core inflation declining to 23.39 per cent, from 24.43 per cent in the previous month.

The current policy rate ensures positive real yields (MPR less headline inflation) which would bolster investor confidence and help anchor inflation expectations of economic agents. Sustained fiscal and monetary policy coordination, with improvements in domestic agricultural output, are expected to further moderate price pressures. Additionally, the relative stability in the foreign exchange market supports the outlook for inflation through reduced pass-through effects.

Real GDP (year-on-year) grew by 3.84 per cent in the fourth quarter of 2024, compared with 3.46 per cent in the preceding quarter. This improvement was driven by both the oil and non-oil sectors, with the services sector being the

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major contributor. The growth momentum is expected to persist over the medium-term, driven by the coordinated mix of ongoing fiscal reforms and monetary policy initiatives. This growth trajectory is also evident in the robust leading economic indicators released by the CBN and NBS.

External sector performance has also improved, with gross external reserves recording a significant increase and the balance of payments returning to a surplus in the fourth quarter of 2024. Banking sector indices also show robustness with sound financial indicators and improved credit to the real sector of the economy despite the tight stance of monetary policy. The growth in credit is expected to further boost productive activities, create jobs, and strengthen domestic resilience.

On the global front, headwinds persist and must not be ignored. The International Monetary Fund (IMF) in recognition of the uncertain global policy environment and emerging risks, downgraded its global output growth forecast to 2.8 per cent in 2025 and 3.0 per cent in 2026, compared with 3.3 per cent in 2024, due to the uncertain policy environment. As I noted in my February 2025 statement, continued implementation of policies that reinforce Nigeria's macroeconomic stability remains a priority, to enhance resilience against external shocks.

Concluding Remarks

The positive trajectories of key economic variables such as inflation, output growth and exchange rate are encouraging and should be preserved. In my view, it is imperative to sustain and build on these gains, especially in the face of ongoing global headwinds. This underscores the need for balanced policy decisions that uphold price stability while fostering economic growth. Given the current dynamics, I am convinced that any adjustments to the existing stance of monetary policy at this time could trigger unnecessary disruptions. Therefore, I vote to maintain the current stance of monetary policy.

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4. BANDELE A.G. AMOO

Having reviewed the recent empirical developments in both the domestic and external economies, I hereby vote as follows:

(a)Retain the Monetary Policy Rate (MPR) at 27.50 per cent.

(b)Retain the asymmetric corridor around the MPR at +500/-100 basis points.

(c)Retain the Cash Reserve Ratio (CRR) at 50.0 per cent for Deposit Money Banks (DMBs) and 16.0 per cent for Merchant Banks.

(d)Retain the Liquidity Ratio (LR) at 30.00 per cent.

My decision was influenced by the following considerations:

1. Global Economic Developments

The resilience witnessed within the global economies in the recent past continued through the first quarter in 2025. The uncertainty in the global growth outlook was further heightened during the past few months of 2025 due to geopolitical tensions, elevated global interest rates, and the trade frictions coming from the on-going tariff war. Global economic uncertainty has increased since the introduction of reciprocal Tariff Policy by the United States. The trade frictions have exacerbated global economic fragmentation and drastically reduced world trade volume. The prevailing global uncertainty has led some Central Banks to opt for a cautious approach to the future path of monetary policy. However, the outlook is subject to downside risks, including the dampening effect of monetary tightening on economic activity, resurgence of protectionism, and heightened geopolitical tensions. Other likely impact of the global economic development uncertainty may include decline in fiscal revenue and space; decreased demand for Nigerian exports; rise in capital outflows; reduced capital inflows and high debt overhang.

The current global disinflation path was constrained by imposition of additional tariffs initially by the US and retaliatory responses which jointly pushed up long-term inflation expectations in some Emerging Market Economies (EMEs). The downside risks have, however, persisted as escalating geopolitical tensions continue to further disrupt commodity prices, and increase fragmentation of trade networks.

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2. Domestic Macroeconomic Developments and Outlook

Domestically, growth continued to be moderate as expected. Data from the National Bureau of Statistics (NBS) showed that Nigeria's Gross Domestic Product (GDP) grew by 3.84% (year-on-year) in real terms in the fourth quarter of 2024. This growth is higher than the 3.46% recorded in the fourth quarter of 2023. The GDP performance in the fourth quarter of 2024 was driven mainly by the Services sector, which recorded a growth of 5.37% and contributed 57.38% to the aggregate GDP.

The banking sector performance continued to be strong and resilient. Total bank assets recorded 22.35 percent growth (N30.83 trillion) as at the end of April 2025 relative to April 2024. Industry credit also increased by N5.99 trillion or 10.89 percent during the same period. Bank liquidity remained adequate in April 2025, as reflected by a high ratio of liquid assets to third-party funds at 50.6%. The Capital Adequacy Ratio (CAR) increased to 15.55% in April 2025 from 10.81% in April 2024, thereby enabling banks to adequately manage their risk-weighted assets and support credit growth. Meanwhile, non- performing loans (NPL), as a proxy of credit risk, rose by 0.1% to 5.6% in April 2025. The latest stress tests indicated solid banking industry resilience against various risks, supported by efficient macro-prudential framework for ensuring profitability as the CBN continue to strengthen synergy with other regulatory entities in the financial sector. Overall, the financial soundness indicators (FSI) trend for both banks and other financial institutions showed strong safety levels in terms of asset growth, solvency, liquidity, profitability and service efficiency.

The improved sector performance engendered positive investor sentiments for the Nigerian economy, particularly within the fixed income instruments' corridor. The Nigerian equities market was bullish for the second continued month in May 2025, with the benchmark NGX All-Share index (ASI) appreciating by 5.62% on monthly basis. This feat emphasized strong investor appetite for domestic equities especially in sound corporate stocks, stimulated by impressive dividend pay-out by blue-chip companies. Accordingly, there appeared to be a shift to selective duration plays by investors, as they interrogate a blend of liquidity dynamics, auction outcomes and macro signals. In the medium term, we expect the prevailing trend to persist, as investors continue to realign their portfolios as situation unfold in monetary, fiscal and macroeconomic developments, specifically Nigeria's Q1 2025 GDP numbers.

The strong external sector performance continued, indicating an improvement in the accumulation of reserves. Nigeria's Balance of Payments (BOP) position remains stable to support our external sector stability. Portfolio inflows remained high, recording positive net inflows as at end-April 2025. The

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exchange rate has remained broadly stable with some minor upside and downside movements. External reserves stood at US$39.01billion at mid-May 2025, from US$38.35billion at mid-Feb 2025, mainly, due to improved crude oil production and stability in the FX market arising from the Bank's on-going policy reforms. Other factors include expected reduction in import demand pressures arising from the full deregulation of the downstream oil sector, reduced petroleum products importation regime, increased inflows and other subsisting measures deployed by the CBN.

Data from the NBS showed that the year-on-year headline inflation rate for April 2025 decelerated to 23.71% from 24.23% in March 2025 due to a slowdown in food and core inflation. Food inflation slowed to 21.26% while core inflation dropped to 23.39 in April 2025. Driving factors for food inflation were improved security around the farming communities; seasonal factors; moderation in transport costs; as well as slowdown in processed food imports.

The commitment of the government to improvements in basic infrastructure, managed fiscal balance, provision of energy and electricity stock, social safety programme, and poverty reduction, security upgrade, efficient management of domestic and foreign debt levels will continue to moderate inflation trends. Lower energy prices would also help to fasten the disinflationary process, potentially facilitating monetary policy easing, which may further support sector investments. Monetary policy restraint is hereby required given the government's recently demonstrated commitment to fiscal consolidation.

3.0 My Concern

In my view, the May 2025 composite PMI points data sent a mixed signal. On the one hand, stronger demand, rising output, and increased purchasing activity - all point to a recovery taking shape. On the other hand, persistent inflation, cost pass-through limitations, wage pressure, and vacillating sentiment raise red flags about the durability of that recovery. The growing gap between output and input prices is becoming a structural