The Central Bank of Nigeria (CBN) has taken a new turn over the past two years, following the dismissal of former governor, Godwin Emefiele, and the emergence of Mr. Olayemi Cardoso as the new governor of the bank. Since then, the central bank has trodden a more orthodox path, especially with respect to monetary policy, focusing on inflation targeting, price and exchange rate stability, rather than quasi-fiscal policy measures as seen in the past.

Essentially, the Monetary Policy Committee raised benchmark interest rates by 875bps since the start of the new central bank team in late 2023. Inflation targeting and price stability have become more of a priority for the committee, reflective of the aggressive interest rate hike, and hold stance taken since the start of 2025 despite the deceleration in inflation. 

Going forward, we expect the MPC to keep benchmark interest rate stable at 27.50%, although we do not rule out the potential for up to a 100bps cut considering declining year-on-year inflation, sustained FX stability and incentive to stimulate economic growth. However, subsequent monetary policy decisions are expected to be carefully implemented based on domestic and global underlying factors.

Kindly find HERE, the full report, covering our analysis and considerations.