By Peter Omopo
The Central Bank of Nigeria (CBN) may reduce its benchmark interest rate as the Monetary Policy Committee (MPC) begins its two-day meeting in Abuja, with analysts projecting a return to monetary easing.
Market consensus on Monday suggests the apex bank could lower the Monetary Policy Rate (MPR) by at least 50 basis points to 26.50 per cent from the current 27.00 per cent.
The decision will be taken by the MPC, the highest policy-making body of the CBN, which sets monetary benchmarks that shape Nigeria’s financial services sector and broader economic direction.
At its last meeting in November 2025, the committee retained the MPR at 27.00 per cent, pausing an easing cycle that began in September 2025 when the rate was reduced from 27.50 per cent.
Factors Supporting a Rate Cut
Economic analysts and financial think tanks tracking the apex bank’s policy direction believe the MPC may resume easing, citing improvements in key macroeconomic indicators.
Among the factors highlighted are a steady decline in inflation, rising external reserves, relative stability of the naira, improved corporate performance outlook and a stronger fiscal position.
Inflation eased slightly to 15.10 per cent in January 2026 from 15.15 per cent in December 2025. Food inflation declined by 195 basis points from 10.84 per cent to 8.90 per cent, while core inflation — which excludes farm produce and energy — dropped by 91 basis points from 18.63 per cent to 17.72 per cent.
Analysts at Afrinvest West Africa said the ongoing disinflation trend strengthens the case for a moderate rate cut aimed at stimulating domestic productivity.
They also pointed to improvements in capital inflows. Data for the third quarter of 2025 showed capital importation rose to $6 billion, representing a 380 per cent increase compared to the corresponding period in 2024. The figure marks the strongest quarterly inflow since $6.1 billion recorded in the second quarter of 2019.
Cumulatively, capital inflows for the nine-month period ending September 2025 reached $16.8 billion, the highest level since $20.2 billion recorded in the comparable period of a previous high-growth year.
Fiscal Reforms and Policy Outlook
Analysts further referenced a recent Executive Order signed by Bola Ahmed Tinubu mandating the direct remittance of oil and gas revenues to the Federation Account. The move, they noted, has strengthened government finances and reduced fiscal vulnerabilities that previously influenced tight monetary conditions.
With interest rates expected to dominate discussions at the ongoing meeting, investors and businesses are closely watching for signals on the CBN’s policy direction.
A rate cut, if implemented, would mark a renewed push toward monetary easing, aimed at supporting economic growth while maintaining price stability.
