Global Monetary Policy 2025: How Nigeria’s CBN Stacks Up in the Great Recalibration

From Washington to Abuja, Central Banks Shift From Shock Therapy to Caution

The world’s central banks are entering the second half of 2025 in what analysts have dubbed “The Great Recalibration”, a cautious retreat from the aggressive monetary tightening of recent years. While inflationary risks remain, policymakers from the U.S. Federal Reserve to the Central Bank of Nigeria (CBN) are prioritizing stability and resilience over fresh economic shocks.

A new report by Norrenberger, titled “From Shock to Calm”, highlights how the pivot is shaping both advanced and emerging markets, with Nigeria caught between global headwinds and its own domestic challenges.

Flashback: Global Shockwaves, Local Impact

Between 2022 and 2024, global central banks fought historic inflation surges with sharp interest rate hikes. Nigeria mirrored this trend, pushing its Monetary Policy Rate (MPR) above 26%, the highest in the country’s history. While this stabilized the naira and slowed inflation, the side effects were severe: borrowing costs soared, businesses contracted, and unemployment deepened.

U.S. Federal Reserve: Holding Steady

The Federal Reserve has kept its benchmark rate at 4.3%–4.5% through H1 2025, wary of inflation risks from new tariffs and global trade frictions. Two possible rate cuts are on the table for later in the year, but Fed Chair Jerome Powell insists the moves will be “data-driven, not calendar-driven.”

Bank of England: Early Cuts

Across the Atlantic, the Bank of England (BOE) has already cut rates twice, lowering its benchmark to 4.25%. Yet inflation remains stubbornly above its 2% target, while weakening job data clouds the outlook. Analysts expect the BOE to deliver further cuts, though cautiously, to support a slowing economy.

European Central Bank: Bolder Steps

The European Central Bank (ECB) has been the boldest so far, slashing its main refinancing rate to 2.15% after inflation cooled across the eurozone. Still, ECB officials warn of volatile global trade conditions that could quickly reverse gains, making flexibility their guiding principle.

Nigeria’s Central Bank: A Balancing Act

For Nigeria, the challenge is even more complex. Unlike the Fed, BOE, or ECB, the CBN is battling not just monetary inflation but structural pressures, food insecurity, energy costs, and foreign exchange volatility.

So far in 2025, the CBN has held the MPR steady, signaling a pause after years of relentless tightening. The pause reflects an effort to consolidate naira stability following FX reforms, while also recognizing the burden high rates have placed on businesses.

“The CBN is walking a tightrope,” said Dr. Celestine Ukpong, economist and insurance investor. “Unlike advanced economies, Nigeria’s inflation is not purely monetary. Aggressive hikes brought temporary relief, but the structural drivers of inflation remain unresolved. The recalibration is necessary, though it must be carefully managed.”

Experts Call for Coordination

Financial analyst Prof. Bismarck Rewane adds perspective: “The Fed, BOE, and ECB can afford to fine-tune rates because their economies have stronger buffers. Nigeria’s case is trickier. Rate policy alone cannot deliver stability, we need fiscal discipline, investment in food production, and structural reforms to complement monetary measures.”

Outlook: Fragile Calm on a Global Scale

Going into H2 2025, the global trend points toward measured rate cuts, though all central banks remain highly data-dependent. For Nigeria, the CBN’s cautious stance suggests it will hold steady longer than its Western peers, unless inflation eases more convincingly.

Norrenberger’s report concludes that the world has shifted from shock to recalibration. In Nigeria’s case, the calm remains fragile, but with policy coordination and resilience, there is scope to translate stability into sustainable growth.