Nigeria: CBN MPC Expected to Hold Interest Rate Steady to Sustain Inflation Moderation

The Central Bank of Nigeria’s (CBN) Monetary Policy Committee (MPC) has commenced its two-day deliberation, with the focus squarely on the direction of the Monetary Policy Rate (MPR), currently set at 27.50%. Amid improving inflation dynamics, market analysts widely anticipate a hold position, signalling a data-dependent approach to future policy shifts.

This meeting comes on the heels of the latest Consumer Price Index (CPI) report from the National Bureau of Statistics (NBS), which showed a notable decline in headline inflation—down by 52 basis points to 23.71% in April 2025 from 24.23% in March. On a month-on-month basis, inflation eased to 1.86%, a significant drop from 3.90% the previous month.

The easing was broad-based, led by a slowdown in food inflation, which declined to 21.26% in April from 21.79% in March. Similarly, core inflation—which excludes volatile items like food and energy—also moderated, falling by 105 basis points to 23.39%, while monthly core inflation dropped sharply by 239 basis points to 1.34%.

In light of this encouraging trend, several analysts and industry sources close to the CBN believe the MPC will prioritize inflation anchoring and policy stability over immediate adjustments. The committee, chaired by CBN Governor Olayemi Cardoso, is expected to maintain its tightening stance to consolidate recent disinflationary progress.

Institutions including Financial Derivatives Company, Cordros Capital, Afrinvest West Africa, and Arthur Steven Asset Management project that the committee will retain the MPR and all other key parameters unchanged. They argue that global macroeconomic headwinds—such as sustained trade protectionism and geopolitical uncertainty—continue to pose downside risks to price and exchange rate stability.

In a recent briefing, Cordros Capital emphasized that despite the current positive real interest rate environment, persistent global volatility and the naira’s gradual depreciation necessitate caution:

“We expect the MPC to maintain its current policy posture, leaving the MPR and other parameters unchanged. This reflects a desire to anchor inflation expectations and preserve the naira’s relative attractiveness to foreign investors.”

While Futureview Financial Services offered a slightly divergent view—suggesting a possible marginal rate cut to support further disinflation—they acknowledged the need for monetary vigilance given evolving global dynamics.

The MPC’s final decision, expected at the conclusion of the meeting tomorrow, will provide critical signals for Nigeria’s financial markets, economic outlook, and investor sentiment heading into the second half of 2025.