The Central Bank of Nigeria (CBN) significantly reduced its allotment of Treasury bills at last week’s auction, rejecting N1.636 trillion in bids from investors. Of the N2.41 trillion submitted, the CBN only accepted N774 billion.
This move, coupled with a reduction in interest rates, suggests the CBN is signaling a potential easing of its monetary policy. The high demand for long-term (364-day) Treasury bills, which saw bids exceeding the offered amount by over four times, indicates strong investor interest.
Specifically:

• Offer and Subscription: The CBN offered N700 billion in Treasury bills, divided across 91-day, 182-day, and 364-day maturities. Total investor bids reached N2.41 trillion.
• Allotment: The CBN allotted N774 billion, with the majority (N704.38 billion) going towards the 364-day bills.
• Interest Rate Changes:
• The 91-day bill’s stop rate dropped by 100 basis points to 17.00%.
• The 182-day bill’s rate fell to 18.00% from 18.50%.
• The 364 day bill fell to 18.43% from 20.32%.
  Market analysts believe this rejection and rate reduction could be a response to the recent decline in inflation. The high demand for the 364-day bills highlights investor confidence in longer-term investments.

The Centre for the Promotion of Private Enterprise (CPPE) has commended the Central Bank of Nigeria’s (CBN) Monetary Policy Committee (MPC) for its decision to maintain current interest rates, aligning with the organization’s expectations. However, the CPPE is calling for future rate reductions and a review of the Cash Reserve Ratio (CRR).
Dr. Muda Yusuf, Chief Executive Officer of CPPE, expressed satisfaction with the MPC’s decision to hold the Monetary Policy Rate (MPR) at 27.50%. He noted that the recent rebasing of inflation, now at 24.48%, below the MPR, justifies the pause to prevent further strain on businesses and consumers.
“Given the decline in inflation, retaining the rates is sensible to avoid exacerbating interest rate pressures. Going forward, we should see a moderation in rates and a relaxation of these tightening measures,” Dr. Yusuf stated.
The CPPE emphasized that maintaining an MPR higher than the inflation rate places undue pressure on investors. Dr. Yusuf urged the CBN to begin a gradual reduction of the MPR and ease the CRR during the next MPC meeting in May.
“The inflation outlook appears better, and we expect the CBN to relax some of these rates by the next MPC meeting,” he added, citing the recent drop in prices of key commodities like energy and pharmaceuticals.
However, the CPPE expressed significant concern over the CRR, currently at 50%, the highest globally. “There is no justification for maintaining such an outrageous CRR level. Our economic situation does not warrant it. The closest to Nigeria’s CRR is Turkey’s, at 25%. Going forward, the CRR needs to be reduced,” Dr. Yusuf asserted.
The CPPE also criticized the wide asymmetric corridor of +500/-100 basis points, arguing it could disconnect the financial system from the real economy, hindering growth.
“If the MPR is already at 27.5%, an asymmetric corridor at +500 basis points is not healthy. Continuing on this trajectory could practically disconnect the financial system from the real economy, which would seriously impact economic growth,” Dr. Yusuf explained.
The MPC, during its 299th meeting, retained the MPR at 27.50%, the asymmetric corridor at +500/-100 basis points, and the CRR for Deposit Money Banks at 50%. The CPPE is urging the CBN to re-evaluate these tightening measures in future meetings.
About CPPE:
The Centre for the Promotion of Private Enterprise (CPPE) is a leading advocacy organization dedicated to promoting a conducive business environment and fostering private sector growth in Nigeria.
Contact:

In a notable development for Nigeria’s economy, the naira has appreciated by N9, closing at N1,505 to the dollar in the parallel market on Thursday, up from N1,514 the previous day. This positive trend follows the Central Bank of Nigeria’s (CBN) decision to maintain all monetary parameters during its 299th Monetary Policy Committee meeting, the first of 2025.

The CBN’s decision to hold steady on interest rates, including the benchmark Monetary Policy Rate (MPR) at 27.5%, aims to strike a balance between controlling inflation and supporting economic growth. This strategy is expected to bolster the naira’s stability, as the CBN continues to prioritize price stability and exchange rate management.

The naira’s recent appreciation is particularly encouraging given the economic challenges Nigeria has faced in recent years. The CBN’s commitment to maintaining economic stability and fostering growth appears to be yielding positive results, with expectations of continued favorable trends in the short to medium term.

During a media briefing following the meeting, CBN Governor Olayemi Cardoso announced that the committee reached a unanimous decision to retain all monetary parameters. This includes maintaining the MPR at 27.50%, the asymmetric corridor around the MPR at +500/-100 basis points, the Cash Reserve Ratio for Deposit Money Banks at 50.00%, and the Liquidity Ratio at 30.00%.

The committee expressed satisfaction with recent macroeconomic developments, which are anticipated to positively influence price dynamics in the near to medium term. Cardoso highlighted the stability in the foreign exchange market, contributing to the naira’s appreciation, as well as a gradual moderation in the price of Premium Motor Spirit (PMS).

However, the committee remains aware of the persistent inflationary pressures, particularly those driven by food prices. They emphasized the importance of improvements in the external sector for exchange rate stability, noting the convergence of rates between the Nigeria Foreign Exchange Market (NFEM) and the Bureau de Change (BDC). The committee urged the CBN to continue its efforts to enhance market liquidity.

Taming Inflation While Enabling Growth

Responding to inquiries about balancing growth stimulation with inflation control, Governor Cardoso acknowledged the inherent trade-offs. He noted, “We can see that accretion to reserves has been consistent, and at one point, we achieved the highest level of reserves in the past three years. We are also seeing inflation gradually beginning to decelerate.”

Cardoso emphasized that increased market confidence indicates the CBN is on the right track. He stated, “Stability is crucial; if investors do not see stability, they will not engage with these markets. Our objectives will continue to focus on achieving stability in both the foreign exchange and financial markets. As stability improves, we anticipate an influx of investments, which is essential for driving much-needed growth.”

He also remarked on the enhanced competitiveness of the naira, which has attracted greater interest from international investors looking to invest in Nigeria’s future.

Aiming for Single-Digit Inflation

Looking ahead, Cardoso reaffirmed the CBN’s commitment to orthodox monetary policies, stating, “We have seen positive outcomes and will remain vigilant. Our objective in the medium to long term is to reduce inflation from double digits to single digits.”

In conclusion, the CBN’s recent decisions reflect a strategic approach to fostering economic stability and growth, while addressing the challenges of inflation. The appreciation of the naira signals a potential turning point for Nigeria’s economy, with optimism for continued progress in the coming months.

By John Audu.

Nigeria’s Money Supply (M2) rose by 18.3% year-on-year to N110.97 trillion in January 2025, up from N93.77 trillion in the same period of 2024, driven by a notable increase in savings in various investment instruments by Nigerians.

The Central Bank of Nigeria (CBN) revealed this in its Money and Credit Statistics data released yesterday, highlighting that the increase in money supply was largely fueled by a 21% surge in quasi-money, which includes savings accounts, treasury bills, money market instruments, and foreign currency deposits. Quasi-money grew to N74.07 trillion from N61.2 trillion in January 2024.

Additionally, demand deposits rose by 13.6% year-on-year to N32.15 trillion in January 2025, compared to N28.3 trillion in January 2024. Currency outside banks also saw a significant increase of 44.5% year-on-year, reaching N4.74 trillion from N3.28 trillion in the previous year. Narrow money (M1) grew by 16.7% year-on-year to N36.9 trillion from N31.6 trillion.

The rise in money supply coincided with a 6% quarter-on-quarter increase in Nigeria’s total public debt, which reached N142.3 trillion in the third quarter of 2024, according to the Debt Management Office (DMO). The CBN data indicated that credit to the government surged by 54% year-on-year to N24.51 trillion in January 2025, up from N23.51 trillion in January 2024.

In contrast, credit to the private sector experienced a decline of 2.09% year-on-year, falling to N74.9 trillion in January 2025 from N76.5 trillion in January 2024. Consequently, net domestic credit decreased by 0.5% year-on-year to N99.4 trillion from N99.9 trillion in the same period of 2024.

Analysts at Cowry Asset Management Limited commented that the rising public debt figures were primarily driven by a widening fiscal deficit due to government budget shortfalls and the ongoing depreciation of the naira. They noted that domestic debt issuance by the DMO to finance fiscal gaps significantly contributed to the increasing debt stock.

The analysts cautioned that Nigeria’s fiscal position remains precarious, posing heightened risks to economic stability unless structural reforms and revenue diversification efforts yield tangible results.