Nigeria’s broad money supply (M3) surged to a record N119.11 trillion in April 2025, according to the latest Money and Credit Statistics from the Central Bank of Nigeria (CBN).
This represents a 22.9% increase from N96.97 trillion in April 2024 and a 4.3% jump from N114.22 trillion in March 2025, marking one of the sharpest monthly expansions in recent quarters.
This liquidity expansion occurs at a time when the CBN is maintaining a tight monetary stance.
In May 2025, the Monetary Policy Committee (MPC) held the Monetary Policy Rate (MPR) at 27.5%, pausing a string of aggressive rate hikes for the second time this year.
While inflation eased marginally to 23.71% in April, questions remain about whether the current monetary settings can withstand the pressures of this rising liquidity without reigniting inflation.
M3, which encompasses narrow money (M1), quasi money, and longer-term deposits, grew strongly on the back of increased net foreign assets (NFA) and net domestic assets (NDA). While both contributed to the increase, the surge in foreign assets was particularly notable.
April’s marginal decline in inflation offered a glimmer of relief. Headline inflation dipped to 23.71%, from 24.23% in March. Food inflation fell from 21.79% to 21.26%, while core inflation eased to 23.39% from 24.43%.
In response, the CBN’s MPC in May 2025 opted to pause further rate hikes, holding the MPR at 27.5%. Other key monetary policy tools were also left unchanged: the Cash Reserve Ratio (CRR) remains at 50% for commercial banks and 16% for merchant banks, while the Liquidity Ratio stands at 30%.
CBN Governor Olayemi Cardoso noted that the bank would observe the impact of its earlier policy tightening measures before making further adjustments. Still, the MPC warned that inflation remains uncomfortably high, and maintained a hawkish tone despite the pause.
With both M3 and M2 rising above 22% year-on-year, and narrow money growing over 6% month-on-month, Nigeria’s monetary authorities face a tough balancing act. While foreign inflows have improved liquidity, the potential inflationary effects of this monetary expansion must be closely watched.
The CBN’s current strategy appears to rest on the hope that external liquidity will not immediately spill into excess demand-driven inflation, especially with inflation trending downward. However, if price pressures re-emerge or the naira weakens significantly again, further tightening may be required.