As the Monetary Policy Committee (MPC) of the Central Bank of Nigeria(CBN) is set to meet for its 300 meeting today, Monday May 19, 2025, analysts say, they expect that benchmark rates will be left unchanged amidst the current uncertainties in the global economy.
This is as some analysts say they expect a slight cut in rates as the latest Consumer Price Index data showed a slowing inflation in the country. Data by the National Bureau of Statistics (NBS) put the inflation figure for April at 23.71, a moderation from 24.23 per cent recorded in March 2025.
The global economy has, in the last month, been riddled with tariffs and counter tariffs that has set off protectionist policies that has impacted trade relations and set some nations on the path of economic downturn.
Although Nigeria is mildly impacted by the tariffs, the International Monetary Fund (IMF) had revised the country’s growth forecast downward to 3.0 per cent from the earlier projection of 3.4 per cent in 2024, citing weakening oil supply and escalating global trade tensions.
According to analysts at Cordros Research, the MPC is likely to adopt a cautious stance, opting to leave all policy parameters unchanged despite Nigeria’s positive real rate of return. The move, they argue, will help anchor inflation expectations and support the naira’s attractiveness in an increasingly uncertain global environment.
While the U.S. Federal Reserve has maintained its benchmark rate at 4.25 per cent to 4.50 per cent for a fourth consecutive meeting, citing balanced risks between inflation and unemployment, and other major central banks have turned dovish. The European Central Bank and the Bank of England have each cut rates by 25 basis points in response to weakening growth and cooling inflation.
Despite tentative progress in de-escalation talks between the U.S. and key trade partners like China and the UK, the persistence of broader trade restrictions continues to cloud the global outlook. As a result, analysts expect the U.S. to maintain elevated interest rates, reinforcing the need for emerging markets like Nigeria to preserve rate differentials to stem capital flight.
Analysts at Cordros Research believe the MPC will refrain from easing policy at this point, fearing that any reduction in the policy rate could jeopardize foreign investor confidence and exacerbate foreign exchange pressures.
The naira has continued to weaken, sliding 3.52 per cent month-on-month in April to close at N1,579.80 to the dollar. So far in May, the exchange rate has hovered between N1,589 and N1,615 to the dollar. Capital outflows driven by global risk aversion and declining oil receipts have pressured Nigeria’s forex reserves, which dipped to an eight-month low in April before recovering slightly to $38.22 billion by mid-May.
“In our view, inflation risks and global interest rate dynamics justify the need to preserve interest rate differentials and limit capital outflows. Accordingly, we expect the MPC to maintain a cautious stance by holding the MPR at 27.5 per cent and leaving all other policy parameters unchanged.” Cordros analysts stated.
However, analysts at Cowry Assets Management Company are more optimistic on a dovish stance, saying they expect a 25 basis points cut on benchmark interest rate. “For the monetary policy committee, the upcoming meeting assumes heightened importance.
“With inflation showing signs of easing and the currency relatively stable, we foresee the Committee considering a modest rate cut of 25 basis points. This would mark a cautious but symbolic shift in policy direction. At its last meeting in February, the MPC opted to pause its tightening cycle, maintaining all parameters amid early signs of inflation cooling. With the April CPI print confirming that trend, the May policy decision could mark the beginning of a measured monetary easing cycle.” The analysts stated.
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