Nigeria Monetary Policy May 2021


Nigeria: Central Bank stays put in May

May 26, 2021

At its 24–25 May meeting, the Monetary Policy Committee of the Central Bank of Nigeria stood pat, leaving the monetary policy rate unchanged at 11.50%. It also kept the asymmetric corridor at plus 100 and minus 700 basis points around the monetary policy rate, the cash reserve ratio at 27.50% and the liquidity ratio at 30.00%. The vote was unanimous, in contrast to the prior meeting when three members voted to hike the rate.

The Committee’s decision reflected the ongoing balancing act between the need to combat elevated inflation and to continue supporting the economic recovery. The Bank commented on the disruptive nature of price instability on productive capacity and thus the economic recovery, stating that members of the Committee remained “focused towards achieving price stability in the short to medium-term”. However, ultimately the Bank decided to stay on hold as a tighter stance could derail the fragile economic recovery and would influence prices only moderately due to persisting supply-side constraints.

The Bank provided no explicit guidance on future rate movements. On one hand, it noted that inflation was above its 6.00–9.00% target rage, and there was a need to cool price pressures. On the other hand, the Committee stated the potential negative impact of tighter monetary policy on economic activity. Looking ahead, our panelists overall expect the Bank to ease its stance in a bid to shore up economic activity.

The next monetary policy meeting is scheduled for 26–27 July.

FocusEconomics Consensus Forecast panelists project the monetary policy rate to end 2021 at 11.89%. In 2022, the panel sees the monetary policy rate ending the year at 12.43%.

Author:, Economist

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Nigeria Monetary Policy Chart

Nigeria Monetary Policy May 2021

Note: Monetary policy rate in %.
Source: Central Bank of Nigeria.

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