Personal Statements of MPC Members for the 299th Meeting of the Monetary Policy Committee (MPC)

Date: Thursday, 20 February 2025
Ref: CBN/MPC/COM/156/299
Attention: News Editors/Gentlemen of the Press

MONETARY POLICY RATE RETAINED AT 27.50 PER CENT

The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) held its 299th meeting on the 19th and 20th of February 2025 to review recent economic and financial developments as well as assess the risks to the outlook for 2025. All twelve members of the Committee were in attendance.

Decisions of the MPC

The Committee was unanimous in its decision to hold all parameters 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

At this meeting, the Monetary Policy Committee noted with satisfaction recent macroeconomic developments which are expected to positively impact price dynamics in the near to medium term. These include the stability in the foreign exchange market with the resultant appreciation of the exchange rate and the gradual moderation in the price of Premium Motor Spirit (PMS). Members, however, were not oblivious of the risk of persisting inflationary pressures driven largely by food prices. The Committee noted the recent rebasing of the Consumer Price Index (CPI) by the National Bureau of Statistics (NBS) which reviewed the weights of items in the consumption

basket to reflect current consumption patterns. The Committee further noted that as the Federal Government continues to improve security in food producing communities, supported by other measures to enhance food supply, food prices are expected to continue to moderate.

Members reiterated the benefits of increased collaboration between the monetary and fiscal authorities, demonstrated at the recently concluded Monetary Policy Forum organized by the Bank. The MPC thus urged the continued strengthening of this collaboration to achieve the mutually beneficial objectives of price stability and sustainable growth.

The Committee highlighted the benefits of the improvements in the external sector to exchange rate stability, including the convergence of rates between the Nigeria Foreign Exchange Market (NFEM) and the Bureau de Change (BDC), and urged the Bank not to relent in its effort to boost market liquidity. In this regard, the Committee acknowledged recent measures introduced by the Bank, such as the Electronic Foreign Exchange Matching System (B-Match) and the Nigeria Foreign Exchange Code, to foster transparency, ethics and credibility in the market. The MPC is, thus, of the view that following major policy measures undertaken by the monetary and fiscal authorities, the flow of foreign direct and portfolio investments as well as diaspora remittances are expected to increase as investor and stakeholder confidence improves. Furthermore, the improvement in oil production, which was 1.54 million barrels per day (mbpd) at the end-January 2025, will enhance the current account position of the Balance of Payments with the attendant positive impact on external reserves.

The MPC observed that despite pockets of macroeconomic headwinds confronting the Nigerian economy, the banking system has remained robust and resilient. Members, however, urged the Bank not to relent on its keen surveillance of the banking system, especially at a time of significant exogenous and endogenous headwinds. In addition, Members called on the Management of the Bank to closely monitor the ongoing recapitalization of the banking system to ensure the injection of quality capital as envisaged in the framework.

Overall, the MPC acknowledged the various policies by the Bank, aimed at anchoring inflation expectations, easing exchange rate pressures, deepening financial inclusion, and improving the transmission mechanism of monetary policy.

Key Developments in the Domestic and Global Economies

Data from the National Bureau of Statistics, using the 2009 base year, showed that headline inflation (year-on-year) stood at 34.80 per cent in December

2024, compared with 34.60 per cent in November 2024. On a month-on- month basis, it moderated to 2.66 per cent in December 2024, from 2.98 per cent in the previous month. Both the food and core components remained key contributors to headline inflation. Food inflation eased slightly to 39.84 per cent in December 2024 from 39.93 per cent in November, while the core component stood at 29.28 per cent in December 2024, compared with 28.75 per cent in November.

Following the rebasing exercise and revision of the weights of the consumption basket, using a 2024 base year, headline inflation for January 2025, now stands at 24.48 per cent (year-on-year) while the food and core components stood at 26.08 and 22.59 per cent respectively. In the view of Members, the new base year and reconstituted consumption basket represents the current economic realities.

Real GDP (year-on-year) grew by 3.46 per cent in the third quarter of 2024 compared with 3.19 and 2.54 per cent in the preceding and corresponding periods, respectively. Both the Oil and Non-oil sectors contributed to the growth, with the Services sector being the major driver. While the Non-oil sector is expected to continue to lead output growth in the near ferm, sustaining the increase in oil production will enhance the contribution of the Oil sector to GDP growth.

The external reserves remained robust at US$39.4 billion as of 14th February 2025, translating to an import cover of 9.6 months for goods and services. In addition to this, the Balance of Payments has remained strong with a positive current account balance of US$6.06 billion as at the end of the third quarter of 2024.

On the global scene, the war between Russia and Ukraine as well as the uneasy calm in the Middle East remain key risks to the growth outlook. There is, however, a glimmer of hope that resolutions may be at hand. In addition to these legacy risks, the adoption of increased tariffs by the new US administration against its trading partners and retaliatory tariffs may result in elevated inflation and tempered growth in 2025. The IMF has, however, maintained global growth projections for 2025 and 2026 at 3.3 per cent apiece.

Members thus, agreed unanimously to continue to monitor both domestic and global developments to identify emerging risks and propose appropriate policy responses to mitigate the impact of associated shocks to the Nigerian economy.

The next meeting of the Committee is scheduled to hold on the 19th and 20th of May 2025.

Thank you.

Olayemi Cardoso
Governor,
Central Bank of Nigeria
20th February 2025

PERSONAL STATEMENTS BY
THE MONETARY POLICY COMMITTEE MEMBERS
MPC MEETING FEBRUARY 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

The global economy has undergone significant changes since the MPC last met in November 2024. Rising uncertainty in international trade, driven by anticipated higher tariffs due to expected retaliatory trade policies against the United States, and increased risk of trade fragmentation, are potentially slowing global growth and posing greater challenges for developing economies. Despite these headwinds, the global growth forecast remains unchanged. According to the International Monetary Fund (IMF), global growth stabilized at 3.2 per cent in 2024 and is expected to remain steady at
3.3 per cent in both 2025 and 2026. Ongoing geopolitical uncertainties
including conflicts in the Middle East and the Russia-Ukraine war as well as increasing protectionism and trade fragmentation, continue to weigh on economic prospects. Growth in the advanced economies is projected to moderate from 1.9 per cent in 2024 to 1.8 per cent in 2025. The Emerging Markets and Developing Economies (EMDEs) are expected to grow at 4.2 per cent in 2025 and 2026. Sub-Saharan Africa's growth outlook has been revised upward from 3.8 per cent in 2024 to 4.2 per cent in 2025, reflecting improved economic conditions in the region.

The IMF projects a gradual moderation in global inflation, forecasting a decline from 5.7 per cent in 2024 to 4.2 per cent in 2025 and 3.5 per cent in
2026. This sustained moderation is driven primarily by easing supply chain
disruptions, anticipated declines in energy prices, and labour market normalization. In the advanced economies, inflation is expected to move closer to the long-term targets set by central banks, supported by subdued energy prices, and relatively tight monetary policy. Inflation in these economies is projected to decrease from 2.6 per cent in 2024 to 2.1 per cent in 2025 and further to 2.0 per cent in 2026. In the EMDEs, it is expected to moderate at a slower pace due to persistent challenges, prominent among which are exchange rate pressures, inadequate transport infrastructure, and energy shortages, which continue to pose upside risks. Inflation in the EMDEs is

projected to decline from 7.8 per cent in 2024 to 5.6 per cent in 2025 and 4.5 per cent in 2026.

I, therefore, vote to hold the policy interest rate while encouraging the Bank to closely monitor the emerging risk from the global economy. I understand the importance of effectively anchoring inflation expectation to ensure price stability. However, the elevated risks to inflation are largely structural.

Domestic Economic Developments and Outlook

The domestic economy expanded by 3.46 per cent in the third quarter of 2024, up from 3.19 per cent in the second quarter, driven primarily by growth in the services, industry, and agriculture sectors. Continued improvements in agricultural output and crude oil production are expected to sustain the positive trajectory. The slow pace of growth in non-oil sectors, subdued consumer demand, elevated interest rates, and high consumer prices pose significant risks to sustained economic expansion.

Year-on-Year headline inflation increased marginally to 34.80 per cent in December 2024 from 34.60 per cent in the previous month. This slight increase was primarily driven by heightened seasonal demand associated with year- end celebrations, as well as rising energy costs.

Other factors that weighed on my decision are as follows:

First is the need to monitor the outlook to domestic inflation, which is projected to decline gradually due to improved economic stability, exchange rate appreciation, relatively lower PMS prices, a hawkish monetary policy stance, and enhanced security in food-producing regions. Secondly, it is essential to monitor the behaviour of the rebased inflation rate. While some scholars attribute the decline in the rebased inflation from 34.8% in December 2024 to 24.48% (year-on-year) in January 2025 solely to statistical adjustments, I take a more optimistic perspective, focusing on how this recalibration helps identify the key drivers of current inflation in Nigeria. The decision to rebase inflation from the 2009 base year to 2024 further supports my longstanding argument that Nigeria's inflation is largely structural. I have consistently maintained that the country's persistent inflation stems primarily from supply-side constraints in critical sectors such as agriculture, infrastructure, and oil. The rebased inflation measure, which assigns greater weight to core inflation, underscores this reality. Core inflation—driven by transportation, housing, healthcare, and electricity costs — remains persistent and is less responsive to monetary policy interventions. While I acknowledge that food inflation serves as a key predictor of overall inflation, recalibrating the inflation measure to place greater emphasis on core inflation more accurately reflects the evolving structure of the Nigerian economy. This approach effectively highlights the fundamental drivers of inflation.

In the light of these insights, the Central Bank of Nigeria should continue to work on enhanced coordination with the fiscal authority to develop policies that address supply-side shocks and mitigate structural inflationary pressures.

2. ALOYSIUS UCHE ORDU

Introduction: The February 2025 MPC meeting took place at a time when the National Bureau of Statistics (NBS) released its rebased CPI, replacing the 2009 price reference period with 2024 as the base year. This milestone provided an opportunity to reflect on the MPC's journey in the past twelve months. Looking back, 2024 was a particularly difficult year for Nigerians, with record high inflation and severe naira depreciation. To tackle these problems head on, the MPC showed exceptional courage by returning to monetary policy orthodoxy – raised interest rates by 875 basis points and significantly constrained money supply by raising the cash reserve ratio. CBN also introduced reforms to the foreign exchange market, for example, the electronic foreign exchange matching system, to enhance transparency and improve operational efficiency in the foreign exchange market. Combined with other fiscal and structural policies, these measures are yielding dividends as reflected in CBN staff presentations of which the following are noteworthy.

Cautious improvements in sentiments and expectations: First, staff presentations indicate a broadly optimistic business outlook, with increased confidence across sectors, particularly in industry and agriculture. Businesses expect higher activity, employment growth, and an appreciating naira, though challenges such as high interest rates, insecurity, and insufficient power supply persist. Second, the Purchasing Managers' Index (PMI) recorded an expansion at 50.2 index points, reflecting growth in the industrial and agricultural sectors, while services contracted due to declines in business activity, new orders, and employment.

Third, on the consumer side, household confidence improved, though sentiment remains cautious due to continued concerns about inflation. Essential spending continues to dominate household expenditure, while purchases of big-ticket items remain low.

Not surprisingly, inflation remains a major concern, with over 80% of businesses and households perceiving it as high, driven by energy costs, exchange rates, and transportation expenses. However, firms and households expect that inflation will ease in the next six month on account of increased domestic production of PMS from the Dangote, Port Harcourt and Warri refineries; the increased production of crude oil to 1.8 million barrels per day; the increased domestic production of food items with enhanced government efforts to boost agricultural productivity; adjustments to food import policies; and the recent re-basing of the CPI data by the NBS.

Growth in domestic output and business activity: The economy continued to show resilience and recovery, with real GDP growth projected to reach 3.2% in 2025, up from 3.1% in 2024 (IMF). Though marginal improvement in per

capita terms, this positive momentum is driven by strong performances in agriculture, industry, and services sectors. In particular, the agriculture sector has been a key driver of this growth, experiencing six consecutive months of expansion. Similarly, the industrial sector is rebounding, benefiting from improved energy supply, lower import costs, and new manufacturing incentives, fostering increased production across key industries such as textiles, cement, and consumer goods.

Strengthening of the naira and foreign exchange reserves: The naira appreciated by 13.6% against the US dollar between November 2024 and January 2025, reflecting improved foreign exchange inflows and effective monetary policies. This appreciation is attributed to higher oil revenue, increased remittances, and foreign investment inflows, as well as enhanced exchange rate management by CBN. The foreign exchange market has stabilized, providing greater confidence for businesses and consumers, reducing import costs, and supporting domestic price stability.

Additionally, Nigeria's external reserves remained robust, supporting exchange rate stability and investor confidence. CBN's continued efforts to increase reserves through non-oil exports, diaspora remittances, and foreign investment inflows have contributed to this positive trend. As a result, the economy is better positioned to withstand external shocks, ensuring a more resilient financial environment for businesses and consumers.

Stock market and investment growth: The Nigerian Stock Exchange (NGX) All- Share Index rose by 7% between October 2024 and January 2025, reflecting strong investor confidence and increased participation in equity markets. The banking, manufacturing, and consumer goods sectors recorded significant gains, driven by improved corporate earnings, increased foreign investor inflows, and positive economic outlook. This performance highlights growing confidence in Nigeria's economic trajectory, with more businesses accessing capital markets for expansion.

In addition to stock market growth, foreign direct investment increased, albeit modestly, particularly in technology, renewable energy, and infrastructure projects. This is a result of ongoing economic reforms, improving business climate, and government incentives aimed at attracting global investors. Continued and much higher investment inflows will be necessary for sustained economic recovery and growth and to transform Nigeria to a trillion-dollar economy.

On fiscal policy: Staff presentations also highlighted positive revenue growth and improved budget performance. The FGN recorded increased revenue collection between January and August 2024, driven by higher oil prices, improved tax collection, and stronger non-oil revenue mobilization. The

implementation of tax reforms and digital tax administration systems contributed to enhanced revenue efficiency. Additionally, improved compliance with value-added tax (VAT) and corporate income tax regulations boosted government revenue. Intense drive will be necessary to raise the overall tax revenue-to-GDP ratio well above 10 per cent.

On the expenditure side, the government prioritized infrastructure development, social programs, and debt servicing. Capital expenditure focused on transportation, energy, and health projects, aimed at stimulating economic growth and job creation. While debt servicing remained a significant portion of government spending, efforts were made to enhance debt sustainability through improved revenue generation and refinancing strategies. The fiscal deficit, although still of concern, showed signs of narrowing, indicating better fiscal discipline and expenditure management.

Looking ahead, it is vital that fiscal policy continues to emphasize revenue mobilization, cost optimization, and sustainable borrowing practices. It is commendable that the government aims to reduce reliance on oil revenues by expanding non-oil revenue sources, including agriculture, manufacturing, mining, and technology sectors. Fiscal consolidation efforts, including subsidy reforms and public financial management improvements, are expected to further enhance budget performance and overall economic stability. With stronger revenue inflows and controlled expenditure growth, the fiscal outlook for 2025 remains positive, supporting economic resilience and long- term fiscal sustainability.

Developments in the global economy: On January 29, the U.S. Federal Reserve kept interest rates on hold at 4.25 – 4.5 per cent and signaled fewer reductions than previously anticipated for the rest of the year. This hawkish stance reflects uncertainties about the new administration's tariffs, immigration, fiscal and regulatory policies and their implications for the U.S. economy. Thus far, the economy has been resilient: Unemployment is relatively low at 4.3 per cent, and consumer spending is healthy though inflation remains elevated with a 3.0 per cent rise in the CPI in January 2025 vis-à-vis a year earlier. Stripping out volatile food and energy categories, core inflation rose by 3.3 per cent for the year ending in January 2025. Similarly, month-on-month consumer prices rose in January by 0.5 per cent, the highest increase since August 2023.

The U.S. Fed is thus expected to maintain a hawkish stance by continuing to pause further interest rate cuts while the economy is strong, and inflation remains elevated. That U.S. interest rates will stay higher for longer marks the end of an era of some of the sharpest and most synchronized monetary policy tightening in advanced countries.

In contrast, other advanced countries are cutting interest rates. On January 30, the European Central Bank lowered interest rates by 25 basis points - a decision that reflects confidence that inflation will return to the 2.0 % medium-term target despite persistent domestic inflationary pressures driven by wage adjustments. While monetary policy remains restrictive, recent rate cuts are gradually easing borrowing costs, though financing conditions remain tight due to past rate hikes still impacting credit markets. The Bank of England and the Bank of Canada also cut their rates. At 49.1 index points, China's purchasing managers' index was below forecasts and marked the first contraction since September 2024, reflecting weaker external demands. This outcome will add further pressure on China's policy makers already challenged by property market slowdown, a loss in consumer confidence and the evident trade tensions with the U.S.

Implications of global developments for the Nigerian economy: Staff presentations also highlighted that geopolitical tensions, global trade policies, and inflationary pressures continue to shape Nigeria's economic outlook. The ongoing tariff escalation between the U.S., China, and other major economies has introduced greater volatility in global commodity markets, affecting Nigeria's trade balance. However, stabilizing oil prices and increasing global demand for Nigerian crude have helped sustain foreign exchange inflows and support economic growth projections for 2025.

That the U.S. appears to be abandoning the rules-based international order that has assured stability, open markets and global growth in the past decades has serious consequences for emerging markets and developing economies. Already, the World Bank's January 2025 Global Economic Prospects noted that living standards in emerging markets and developing economies will lag further behind the advanced countries in the period ahead.

Monetary policy shifts in advanced economies, particularly the U.S. Federal Reserve and the European Central Bank, clearly have direct implications for Nigeria. The delayed pace of interest rate cuts in the U.S. has influenced global financial markets, affecting capital flows to emerging markets like Nigeria. As global investors seek higher returns, some have shifted away from emerging markets, leading to capital outflows and exchange rate pressures on the naira. However, the naira's recent appreciation and CBN's foreign exchange management strategies have helped stabilize the financial markets, mitigating some of these risks.

Despite external headwinds, Nigeria's economic resilience is supported by structural reforms and policy adjustments. The government's focus on diversifying revenue sources beyond oil, boosting domestic production, and

improving infrastructure investment is expected to cushion the economy against external shocks. The gradual easing of global inflation and increased foreign investment into non-oil sectors present opportunities for sustained growth. Continued monitoring of global developments, proactive monetary and fiscal policies, and structural reforms will be critical to ensuring long-term economic stability and competitiveness in the face of evolving global challenges.

Concluding remarks and rationale for my vote: Nigeria commenced 2025 on a brighter note than 2024. But we are not out of the woods yet. The lesson from global experience is that one of the worst mistakes we can make is to tolerate sustained and rising inflation. Indeed, the necessary condition for maximum sustainable economic growth is stable prices. As such, I continue to see a persuasive case for the MPC to stick to its script, for now, and keep interest rates on hold. This is the first time to do so in the past seven meetings. We will closely monitor developments in the period ahead and make decisions as appropriate based on the available data. I therefore voted to hold the MPR, the CRR, liquidity ratio, and the asymmetric corridor at their current rates.

3. BALA MOH'D BELLO MON

Opening Statement
At the February 2025 Monetary Policy Committee (MPC) meeting, the first in the year, I voted to hold all parameters 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.

The meeting, which was held approximately one year after the current MPC commenced sitting, provided an opportunity to appraise the effectiveness of the Committee's policies on key macroeconomic indicators.

It is gratifying to note that previous policies of the Committee, complemented by the Bank's administrative policies and supportive fiscal initiatives, are yielding positive outcomes, leading to the gradual restoration of domestic macroeconomic stability. This is supported by recent statistics which show continued moderation in inflation persistence, relative stability and appreciation in the naira exchange rate, and a sustained positive output performance.

I, also, evaluated current global developments with potential implications for Nigeria's macroeconomic performance, including shifts in international trade patterns, geopolitical dynamics, and price developments. This robust analysis and the short-to-medium term outlook for key macroeconomic indicators, guided my decision at the meeting. Outlined in the ensuing sections, are my reflections on specific economic indicators.

Key Considerations

A major high point of the meeting was the recent rebasing of the Consumer Price Index (CPI) by the National Bureau of Statistics (NBS), which revised the weights of items in the consumption basket to reflect current consumption patterns. Following the rebasing exercise and revision of the weights of the consumption basket, which adopted a 2024 base year, headline inflation for January 2025 was reported as 24.48 per cent (year-on-year) with the food and core components at 26.08 per cent and 22.59 per cent respectively. The exercise conforms with global best practices, enhances data credibility and ensures alignment with prevailing macroeconomic realities, for informed policy decision-making.

At the current inflation level, real yields (MPR less headline inflation) are now positive, a development that would boost investor confidence and enhance

the expectations of economic agents. Further moderation in domestic prices is expected with the sustained coordination of monetary and fiscal policies.

Real Gross Domestic Product (GDP) grew by 3.46 per cent (year-on-year) in the third quarter of 2024 compared with 3.19 per cent and 2.54 per cent in the preceding and corresponding periods, respectively. Notably, the non-oil sector was the major driver of GDP growth, a reflection of the importance of ongoing efforts by the federal government at economic diversification for sustainable and inclusive growth. The recent improvement in crude oil production is a welcome development that is expected to further support output expansion throughout the year. These positive trends provide the MPC with greater latitude to focus on its core mandate of ensuring price and financial system stability.

Against the backdrop of tight liquidity management and the recent modification of the foreign exchange (FX) management strategy, the naira exchange rate has demonstrated relative stability, with considerable appreciation. The revised FX management strategy, which includes the adoption of the Electronic Foreign Exchange Matching System (EFEMS) and the Nigeria Foreign Exchange Code, to enhance transparency, ethics and credibility in the market, is gradually yielding desired outcomes. A substantial portion of FX demand has migrated to the official window, thus reducing speculative demand and allowing market forces to play a more significant role in exchange rate determination. As confidence in the revised framework grows, the positive implications for domestic price stability are expected to gradually unfold.

The banking sector has remained robust and stable. Reports presented at the meeting indicate that prudential ratios are within regulatory thresholds, and stress test results remain satisfactory despite the contractionary stance of monetary policy. Nonetheless, the Bank remains vigilant with proactive measures such as the ongoing recapitalization of commercial banks which is crucial to ensuring continued stability amidst evolving global and domestic economic conditions.

On the global front, downside risks remain elevated due to factors such as escalating trade tensions, persistent conflicts in the Middle East and Ukraine, and climate related shocks. On the contrary, there are also potential upside risks to global economic developments such as stronger-than-expected demand, particularly in the advanced economies, and China which could boost global growth prospects.

Against this backdrop, the outlook for the global economy in 2025 remains uncertain, and the projected stability is confronted with a complex mix of risk factors. In addition, inflation in major advanced economies faces fresh

headwinds associated with the ongoing tariff wars and labour demand issues. This may result in unanticipated monetary policy adjustments with implications for emerging markets. In this context, therefore, continued implementation of policies that reinforce Nigeria's macroeconomic stability remains a priority, to enhance resilience against external shocks.

Concluding Remarks

While I note the positive short-to-medium term outlook for the Nigerian economy, it is imperative to sustain coordinated and orderly positive measures to further strengthen macroeconomic fundamentals.

Overall, I am convinced that the primary objective of monetary policy at this point would be to preserve and deepen the relative stability which the economy is exhibiting. The current monetary policy configuration is suitable, in my view, to support this goal, hence my decision to vote for a hold.

4. BANDELE A.G. AMOO

Having reviewed the recent empirical developments in both the domestic and external economies, I decided to 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.

The following consideration influenced my decision.

1. Global Growth and Inflation

The resilience witnessed in global economic recovery in the recent past continued through February 2025. The IMF (World Economic Outlook, WEO) however, predicted that global growth will likely remain flat at 3.3 per cent apiece in 2025 and 2026 compared with 3.2 per cent in 2024. Output expansion in the emerging market and developing economies (EMDEs) is currently stable, with the current pace expected to continue over the short term. However, the outlook is subject to downside risks, including the dampening effect of monetary tightening on economic activities, resurgence of protectionism, and heightened geopolitical tensions.

Global average inflation continued to slide, giving rise to precipitating monetary policy convergence amongst the advanced economies. The downward trend is traceable to continued energy price decline, ease in supply chain disruptions and other positive inflation expectations. A report by the International Monetary Fund (World Economic Outlook, January 2025 update) forecasts global inflation to moderate from 5.7 per cent in 2024 to
4.2 and 3.5 per cent, in 2025 and 2026, respectively. The downside risks have,
however, persisted as escalating geopolitical tensions continue to further disrupt commodity price declines, and increase fragmentation of trade networks.

Also, global commodity prices exhibited minimal volatility lately, with forecast of downward trajectory, especially in energy prices. Food inflation is projected to decline further due to improved crop harvest by key producers across several regions. Tighter supplies in the Russian Federation and mixed winter crop conditions in parts of the European Union, Argentina and the US; emerging trade wars; coupled with uncertainties from ongoing geopolitical tensions in some regions, pose significant risk to the outlook.

Consequently, some central banks in emerging markets and advanced economies continued to cut their policy rates as inflation moderates but remain cautious to ensure achievement of their set targets. Others, however, retain their restrictive stance as upside risks to inflation persist.

2. Domestic Economic Developments and Outlook

Information 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, compared with 3.46% recorded in the fourth quarter of 2023. 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 aggregate GDP. The growth of the industry sector was 2.00%, a decline from 3.86% in the fourth quarter of 20