- Noted drop in balance of payment surplus to $1.10bn in Q4-24, from USD4.21bn in Q3-24
BY BONNY AMADI
The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) again, as expected, held the Monetary Policy Rate (MPR) at 27.5%. The MPC’s decision was underpinned by the need to anchor inflation expectations and ease the pressure on the naira amid the increased global uncertainty. Experts maintained that the rate will rejuvenate the money and equities market yields of 18.5% for Treasury bills and 17.0% for FGN bonds, while the equities market will record improved performance.
Additionally, the Committee retained all other parameters – Cash Reserve Requirement (CRR) for Deposit Money Banks (DMBs) and Merchant Banks at 50.0% and 16.0%, respectively; the asymmetric corridor around the MPR at +500bps/-100bps and the liquidity ratio at 30.0%.
On Domestic Growth:
The Committee acknowledged the robust growth recorded in Q4-24 a 3.84% y/y growth against 3.46% y/y posted in Q3-24, which was largely driven by strong growth in the services, manufacturing and agricultural sectors, despite the moderation in the oil sector growth.
On Inflation:
The MPC also acknowledged the sustained moderation in food inflation (-53bps to 21.26% y/y). However, it noted that elevated electricity tariffs and the recent naira depreciation have kept core inflation persistently high, with the rate standing at 23.39% in April. Nonetheless, the Committee expressed optimism that the relative stability in the exchange rate and the moderation in PMS prices could help ease overall consumer price pressures in the near term.
On External Sector:
The MPC acknowledged the recent build-up in external reserves, which rose by 2.9% to USD38.90 billion from USD37.82 billion as of March 31, providing a buffer of over 7.0 months of import cover for goods and services.
Conversely, the balance of payments surplus narrowed to USD1.10 billion in Q4-24, down from USD4.21 billion in Q3-24, largely due to a moderation in the current account surplus.
The Committee also highlighted the CBN’s intensified efforts to curb heightened naira volatility through ongoing market reforms and strategic FX interventions, particularly in the face of persistent global headwinds.
On Global Development:
The Committee underscored the mounting global pressures, largely driven by the United States’ unfavourable trade policies. Heightened uncertainty, coupled with expectations of increased oil output from OPEC+, has contributed to a moderation in crude oil prices—raising concerns over the potential adverse effects on Nigeria’s fiscal revenues and widening fiscal deficit.
According to the MPC, the global economy is expected to maintain positive growth despite shocks posed by the increased trade tension. This is in line with the IMF’s global growth projection of 2.8% y/y in 2025 and 3.0% y/y in 2026.
Investment experts, Cordros’ In its view pointed that the tone of the latest MPC meeting reflected a cautious approach—aligning with its expectations—amid rising global economic uncertainty and high inflation risk fuelled by recent naira volatility.
Cordros also noted that the Monetary Policy Committee emphasized the importance of monitoring both domestic and international developments, a perspective that underpins its decision to maintain the policy rate at its current level.
While no explicit guidance was provided on the direction of future policy moves, we believe the MPC will remain data-dependent, closely tracking trends across inflation, exchange rate movements, and broader macroeconomic conditions.
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