July 21, 2025/CSL Research

Key Takeaways

• We expect the Central Bank of Nigeria (CBN) to keep the Monetary Policy Rate (MPR) unchanged at 27.5% during its upcoming Monetary Policy Committee (MPC) meeting, which concludes tomorrow. This would mark the third consecutive meeting this year in which the benchmark rate is held steady.

• The MPC faces a complex decision environment. Externally, uncertainty around tariffs and the risk of capital flight are key concerns. Domestically, underlying inflationary pressures remain persistent, as evident by the rise in both core and food inflation.

• We see the September MPC meeting as a more plausible window for potential monetary easing, assuming inflation trends and external conditions evolve favourably. 

We expect the CBN to maintain its benchmark policy rate for a third consecutive meeting this year. The MPC of the CBN is meeting today and tomorrow to make its third interest rate decision of the year, with the outcome expected by early Tuesday afternoon. In our view, the most prudent course of action at this time would be to maintain the benchmark policy rate at its current level of 27.5%.

While some stakeholders have advocated for a rate cut, citing improving macroeconomic indicators, the potential to lower borrowing costs, boost credit growth, and stimulate economic activity, we believe such a move would be premature. We note that given persistent global economic uncertainty, maintaining the current policy stance offers a more cautious and balanced approach.