According to analysts, the Central Bank of Nigeria’s (CBN) Monetary Policy Committee (MPC) may progressively reduce the MPR by 50 basis points during its September 22 and 23 meeting.
They warned that even while the naira has stayed mostly constant and inflation has continued to decline, the MPC may change its mind and gradually move toward monetary easing.
Cordros Securities analysts felt that the Committee might start a slow shift toward monetary easing since important macroeconomic indicators point to increased stability.
In keeping with its commitment to price and exchange rate stability, we anticipate a 50 basis point reduction in the Monetary Policy Rate (MPR), indicating a modest attempt to promote economic development.
“We expect the MPC to begin reassessing its current policy stance, supported by sustained improvements in key indicators (inflation and the exchange rate) and a more positive outlook,” the Cordros Researchers stated in response to the ongoing improvements in key indicators.
Following the US Fed’s rate cut and the possibility of additional policy accommodation in the near future, the Committee is also anticipated to take into account recent global movements toward monetary easing.
“Capital flows into emerging and frontier markets, such as Nigeria, should benefit from this, as it provides an extra layer of support to ensure ongoing exchange rate stability.”
Nevertheless, we anticipate that the Committee will continue to exercise caution, striking a balance between policies that promote development and its primary responsibility of preserving price stability. In particular, we think that any easing will be carefully calibrated to keep interest rates competitive enough to draw in capital and keep inflation expectations stable.
“In light of this, we anticipate a 50 basis point reduction in the Monetary Policy Rate (MPR) to 27.00% at the meeting next week, while keeping other parameters unchanged.”
The analysts wrote, “We project that Nigeria’s economy expanded by 3.90% y/y in Q2-25 (Q1-25: +3.13% y/y; Q2-24: +3.48% y/y), supported by solid performances across both the oil and non-oil sectors,” in reference to striking a balance between growth-supportive policies and its primary duty of preserving price stability. With higher crude output (Q2-25: 1.68 mbpd vs. Q2-24: 1.47 mbpd), the oil sector is predicted to have grown 11.90% year over year. This rise was supported by more investment, improved pipeline surveillance, and fewer terminal shut-ins.
A recovery in agriculture (+2.63% y/y vs. Q1-25: +0.07% y/y) was a major factor in the non-oil sector’s probable 3.62% year-over-year growth (Q1-25: +3.19% y/y).
