CBN Holds Interest Rate at 27.50% Following CPI Rebasing

Nigeria’s central bank has maintained its benchmark interest rate at 27.50%, choosing stability following the recent rebasing of the Consumer Price Index (CPI). The decision, announced after the Monetary Policy Committee (MPC) meeting on Thursday, reflects a cautious approach by CBN Governor Olayemi Cardoso, who is balancing inflation control with economic growth.

The MPC voted unanimously to hold rates steady, citing macroeconomic trends such as exchange rate stability and a gradual slowdown in fuel price increases.

“The committee noted the recent rebasing of the CPI by the National Bureau of Statistics (NBS), which adjusted the weighting of items in the consumption basket to reflect current spending patterns,” Cardoso stated.

Impact of CPI Rebasing

The CPI rebasing altered Nigeria’s inflation calculations, reducing the weight of food prices in the index. As a result, inflation, previously reported at 34.48% in January, was adjusted down to 24.48% under the new methodology.

Despite the apparent decline, underlying inflationary pressures remain, particularly in food and imported goods. Analysts argue that while maintaining rates helps prevent excessive tightening, a premature rate cut could reignite inflationary risks.

CBN’s Strategy: A Pause, Not a Pivot?

Since early 2024, the CBN has aggressively raised interest rates to combat inflation and stabilise the naira. Holding the rate suggests a temporary pause to assess the impact of previous hikes rather than an immediate shift in policy.

“Inflation is at an inflection point but could pick up again in a few months. The MPC will likely wait for at least three more months to assess the rebased numbers before making a major move,” said Basil Abia, an economist at Veriv Africa.

While businesses and consumers still face high costs, the central bank appears committed to a measured approach. With the next MPC meeting set for May 2025, investors will be watching closely for any signs of a shift toward monetary easing if inflation shows further moderation.