In January 2026, the financial system liquidity saw notable fluctuations, reflecting various liquidity mop ups by the central bank through multiple OMO sales, inflows from primary market repayments and activities at the discount window. Specifically, there was NGN1.88trn net OMO outflow, while other primary market auctions also led to a net outflow of NGN1.24trn in the period.

However, activities at the discount window showed that banks were net lenders to the tune of NGN51.51trn (SDF: NGN52.60trn vs SLF: NGN1.09trn), providing support for system liquidity. Consequently, liquidity balance averaged NGN2.41trn in January, lower than the NGN3.20trn recorded in December 2025. 

Going forward, we see mixed sentiments in the fixed income market in February, as yields are expected to range-bound amidst cautious trading amongst investors. Although we expect system liquidity to remain optimal, supported by inflows from primary market repayments and substantial bank placements at the SDF window, mopping up activities by CBN should keep liquidity in check.

Furthermore, we expect inflation numbers, DMO s borrowing appetite and monetary policy actions to drive market sentiment this month. For monetary policy, we see scope for the committee to further hold the benchmark interest rate at 27.00%, albeit with a slight possibility of a modest cut.

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