CBN retains interest rate at 27.5%, encourages banks to make more cash available at ATMs

Nigeria’s apex bank, the Central Bank of Nigeria (CBN) has decided to retain the monetary policy rate (interest rate) at 27.5 per cent. The tool is the baseline interest rate in an economy where every other interest rate used within an economy is built. The new rate was disclosed during a press briefing of the 299th Monetary Policy Committee (MPC) meeting and the first of 2025 held at the CBN headquarters in Abuja.

At the briefing, the governor of the apex bank, Olayemi Cardoso, said the committee members unanimously decided to retain the interest rate.

“The committee was unanimous in its decision to hold all parameters and thus decided as follows, one: retain the MPR to 27.50 per cent,” Cardoso said. 

The CBN governor also said that the committee, which consists of 12 members, decided to retain the asymmetric corridor around the MPR at plus 500 to minus 100 basis points, the Cash Reserve Ratio of deposit Money banks at 50 per cent, and merchant banks at 60 per cent. It also retained the liquidity ratio at 60 per cent. 

The committee also noted that the foreign exchange rate has been stable and also noted the frequent inflationary pressures which were driven by food prices.  This spurs from the rebasing of the CPI as a critical step in ensuring that inflation data remains relevant and reflective of economic realities.

According to data released by the National Bureau of Statistics (NBS), Nigeria’s headline inflation rate dropped to 24.48 per cent year-on-year in January 2025, following the rebasing of the Consumer Price Index (CPI).

The report highlights a decline in the general price level of goods and services compared to 34.30 per cent and 34.80 per cent in November and December 2024 respectively, which was calculated using the previous methodology.

The CBN has raised interest rates by a cumulative 16 percentage points since 2022 to curb decades-high inflation and stabilize the naira, which has depreciated by 70% against the US dollar since the introduction of currency reforms in 2023.

Since Governor Olayemi Cardoso assumed office in September 2023, the central bank’s monetary tightening has yielded notable results, with the naira trading within a narrow band of 1,470 to 1,550 per dollar since early December.

The next MPC meeting, the second of the year, is slated for the 19th and 20th of May 2025.

Also Read: CBN launches whistleblowing website, to go live on January 1, 2025.

Some other CBN recent policies aside from interest rate

Recall that the CBN reviewed ATM charges in response to rising costs of operation for banks and the need to improve the efficiency of ATM. Then, it announced the discontinuation of the three free withdrawals per month on ATM cards.

As such, customers who are withdrawing at the ATMs of their own banks and financial institutions in Nigeria will not be required to pay any ATM charges. 

However, when withdrawing from another bank or financial institution’s ATM in Nigeria, if the withdrawal takes place on-site (within the bank’s premises) such a withdrawal would attract a charge of 100 naira for every 20,000 naira withdrawal.

But when the ATM is offsite (i.e. located outside bank premises like at shopping malls, airports, grocery stores, or gas stations) such a withdrawal attracts the basic charge of 100 naira for 20,000 naira as well as a surcharge of not more than 500 naira per 20,000-naira withdrawal.

During Thursday’s briefing, the CBN governor noted that recent ATM policies emerged out of the shortage of currency in December 2024. While noting recent improvements in currency in circulation, he noted that commercial banks should ensure regular cash at their ATMs as there is a need for more improvement.

Last week, CBN threatened to sanction commercial banks that force customers to withdraw below N20,000 per transaction from Automated Teller Machines (ATMs) despite having higher funds. 

While highlighting the warning via a Q&A following its recent review of ATM withdrawal fees, the Nigerian apex bank stressed that ATM charges for withdrawals made from other banks’ ATMs are charged based on the fact that customers can withdraw N20,000 per transaction. 

“Any bank that compels a customer with sufficient funds in their account to withdraw less than N20,000 per transaction, against their desire for a higher sum, would be contravening this regulation and will be sanctioned appropriately,” the bank stated. 

On ATM withdrawal charge fees, the apex bank noted that commercial banks are not allowed to charge more than the specified fee. They can, however, choose to charge below the prescribed fee as it is related to their finance and cost structure.