The Monetary Policy Committee of the Central Bank of Nigeria, at its 299th meeting held on February 19th and 20th, 2025, resolved to retain the Monetary Policy Rate (MPR) at 27.50% and maintain the asymmetric corridor around the MPR at +500/-100 basis points. The Cash Reserve Ratio (CRR) for deposit money banks and merchant banks was also maintained at 50% and 16%, respectively, while the liquidity ratio remained at 30%. The committee cited recent positive macroeconomic developments, including improvements in Nigeria’s foreign exchange market and the stabilization of petroleum prices, as key reasons for its decision. Additionally, the recent rebasing of the Consumer Price Index (CPI) by the National Bureau of Statistics, aimed at reflecting current economic realities, provided the committee with updated insights on price stability, influencing its decision to hold rates steady. While maintaining the rates could support foreign exchange market stability and attract foreign investment, it also presents potential drawbacks. High borrowing costs may slow economic expansion, particularly for small and medium-sized enterprises. Therefore, while monetary tightening is essential for price stability, a gradual reduction in the Cash Reserve Ratio (CRR) is necessary to enhance liquidity for businesses, stimulate domestic investment, and drive job creation. Furthermore, the government should strengthen non-oil export sectors to reduce import dependency and sustain exchange rate stability.

According to the Organization of Petroleum Exporting Countries’ (OPEC) report, Nigeria’s average daily crude oil production in January (based on direct communications) was 1.539 million bpd, an increase of 54,000 bpd (3.64%) from 1.485 million bpd recorded in December 2024. The report revealed that Nigeria exceeded its OPEC quota (of 1.5 million bpd) by 39,000 bpd. This commendable increase, however, falls short of the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) production target, which is set at a minimum of 2.1 million bpd for 2025. A 26.71% increase in crude oil production from the current level is required to meet this NUPRC target. The report further revealed that crude oil prices increased to US$80.14 per barrel in January 2025, up from US$74.22 per barrel recorded in December 2024, representing a 7.98% month on-month increase. With crude oil prices largely determined externally, one way to improve oil revenue (a major source of revenue and FX for the country) is to boost upstream activities and expand the country’s crude oil production capacity. There is a need to sustain and exceed the production level, to demand a higher quota from OPEC. To boost production levels, several policies should be implemented to attract investment, including full implementation of the Petroleum Industry Act (PIA). Also, there is a need to strengthen efforts to curb oil theft and pipeline vandalism by deploying technology such as the Advanced Cargo Declaration regime to track and prevent such activities.

In January 2025, the inflation rate (CPI) dropped to 24.48% from 34.80% in December 2024, marking a 10.32 percentage point decrease. Food inflation also declined, falling 13.75 percentage points to 26.08% from 39.84% the previous month. Additionally, urban inflation dropped to 26.09%, while rural inflation decreased to 22.15%. 

The Nigeria Exchange (NGX) weekly market report for the week ending February 14, 2025, reflected a positive performance. The NGX All-Share Index (ASI) appreciated by 2.00% to close at 108,053.95 points, up from the previous week’s level. Similarly, the market capitalisation increased by 2.78% to N67.418 trillion, reinforcing strong investor confidence and sustained market momentum. Sectoral performance was mixed, as most indices recorded gains, except for the NGX Main Board, NGX Banking, NGX AFR Bank Value, NGX AFR Div Yield, NGX MERI Growth, NGX Consumer Goods, and NGX Oil & Gas indices, which declined by 0.79%, 0.24%, 0.39%, 1.26%, 1.03%, 3.63%, and 2.30%, respectively. Meanwhile, the NGX Sovereign Bond index remained unchanged, indicating stability in that segment. The continued growth in the equity market suggests improving investor sentiment, likely driven by factors such as enhanced liquidity, corporate earnings expectations and favourable macroeconomic conditions. However, for long-term market stability and sustained growth, strengthening macroeconomic fundamentals is crucial. Key focus areas include exchange rate stability, sustainable debt management, corporate transparency, and improved financial data availability. Addressing these factors will further enhance investor confidence and support the positive trajectory of the Nigerian stock market

According to the Stanbic IBTC Bank purchasing managers index report, Nigerian private sector activity increased by 1.8 points, rising from 52.7 in December 2024 to 54.5 in January 2025. This marks the second consecutive month above the 50.0 threshold and represents the fastest growth rate since April 2022. By interpretation, a reading below 50 indicates a decline in private sector activity, a reading of 50 reflects stability while a reading above 50 signals expansion and higher productivity. The recovery that began in December gained further momentum in January, driven by increased business purchasing activity, which boosted input acquisition and production. Companies also benefited from faster supplier deliveries and remained optimistic, showing greater confidence than in December 2024. Although inflation remained high due to exchange rate depreciation and rising costs of raw materials and transportation, the increase in PMI suggests that businesses are investing more in inputs and production, which could lead to higher output and employment. Such increased purchasing activity could lead to higher demand for goods and services, which could still put an upward pressure on the prices of goods and services and potentially affect inflation. To sustain this momentum, policy measures such as tax relief and subsidies should be introduced to support small and medium-sized enterprises. Additionally, improving transport and logistics infrastructure would enhance supply chain efficiency and help stabilize costs.