CBN Freezes Interest Rate at 27.5% for 7th Time

For the seventh time in a row, the Central Bank of Nigeria (CBN) has kept its benchmark interest rate unchanged at 27.5%. The move, announced after the conclusion of the 301st Monetary Policy Committee (MPC) meeting in Abuja, underscores the apex bank’s commitment to curbing inflation. But while policymakers hailed the decision as a step toward economic stability, millions of Nigerians continue to feel the pinch of rising living costs and steep borrowing rates.

Speaking to journalists after the meeting on Tuesday, CBN Governor Dr. Olayemi Cardoso said the decision was unanimous among all 12 MPC members, and was based on “the need to sustain disinflation and sufficiently contain price pressure.”

On paper, it was a technical call backed by macroeconomic indicators. But for ordinary Nigerians—market traders, small business owners, salary earners, and students—the announcement meant one thing: more of the same.

A Rate Hold—and a Reality Check

In Lagos, Mary Obika, a fashion entrepreneur in Yaba, sighed as she heard the news on a radio broadcast. “They’re saying inflation is going down, but I still pay more for fabric and rent every month,” she said. “Now that the rates are still high, getting a loan to expand is impossible.”

Mary’s frustration is shared by many. Interest rates in Nigeria have remained elevated for months, making credit expensive and stifling for households and small businesses—the engine of the country’s informal economy.

The MPR, or Monetary Policy Rate, is the benchmark interest rate that determines lending costs across the banking system. Since early 2024, the CBN has taken an aggressive stance, tightening monetary policy to combat inflation. And while inflation has eased slightly, it remains well above the CBN’s target.

Cardoso’s Tightrope Walk

Governor Cardoso, who assumed office in 2023, faces a delicate balancing act. With inflation still persistent, relaxing monetary policy could trigger another surge in prices. Yet, tightening it further could suffocate growth in an already struggling economy.

“The decision was carefully considered,” Cardoso told reporters. “We are seeing a moderation in inflation, and we believe holding the rate will help consolidate those gains without derailing recovery.”

The MPC’s decision also included maintaining:

• Asymmetric corridor: +500/-100 basis points
• Cash Reserve Ratio (CRR): 50% for Deposit Money Banks, 16% for Merchant Banks
• Liquidity Ratio: 30%

Economists interpret this as a continuation of a cautious, data-driven strategy aimed at building macroeconomic stability—especially at a time when Nigeria is trying to stabilize the naira and rebuild investor confidence.

Policy vs. People: A Widening Gap

But for many Nigerians, the impact of these decisions feels far removed from their daily struggles. A recent survey showed that over 62% of Nigerians want interest rates lowered, saying the cost of borrowing hurts more than the country’s perennial issues like power outages or insecurity.

“I took a loan from a microfinance bank at 34% interest just to restock my shop,” said Aliyu Gambo, a trader in Kano. “Now I’m paying more in interest than I earn from the goods. Government policies don’t touch people like us.”

This sentiment highlights a growing disconnect between macroeconomic policy and the lived realities of average Nigerians. The CBN’s cautious tone might comfort global investors, but domestically, the mood is less optimistic.

External Gains, Domestic Pains

Still, there are signs of progress. Nigeria’s external reserves rose to $40.1 billion in July, offering the CBN more ammunition to defend the naira and manage currency volatility. But such gains remain abstract to the average citizen.

“The reserves are growing, but what does that mean if food prices are still going up and small businesses can’t get loans?” asked Ngozi Dike, a civil servant in Enugu.

What Lies Ahead?

The CBN is walking a tightrope—balancing inflation control with economic growth, currency stability, and social pressures. While the apex bank has avoided a shock decision, the ripple effects of its prolonged tight policy are being felt across the economy.

Analysts expect the bank to continue monitoring data in the months ahead. But unless inflation falls significantly or the economy shows stronger signs of resilience, the pressure to ease rates may mount—not just from markets, but from the millions of Nigerians still waiting for relief.

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