Analysts Advocate Interest Rate Cut As Monetary Policy Committee Meets

Many analysts expect the Monetary Policy Committee (MPC) of the Central Bank of Nigeria(CBN)  to further cut rates by either 50 or 100 basis points on the back of the fast slowing inflation in the country as the Committee sits today for its  303rd two-day meeting (Monday and Tuesday, November 24, 25, 2025) to deliberate on the monetary pathway for the country.

The MPC had, at its last meeting, commenced monetary policy easing, cutting the interest rate by 50 basis points to 27.00 per cent, while adjusting the Standing Facilities corridor around the MPR to +250/-250 basis points, CRR for commercial banks to 45 per cent and retaining that of merchant banks at 16 per cent.

The MPC had also introduced a 75 per cent CRR on non-TSA public sector deposits, while keeping the Liquidity Ratio unchanged at 30.00 per cent.

According to analysts, the latest inflation figures, coupled with firmer exchange rate conditions and improving market confidence, have provided policymakers with their strongest justification yet to shift toward a more accommodative stance.

Data from the National Bureau of Statistics (NBS) showed that headline inflation fell steeply from 18.02 per cent in September to 16.02 per cent in October, a decline of 1.97 per cent, the sharpest monthly decline recorded this year. Food inflation fell to 13.12 per cent from 16.87 per cent, a drop of 3.75 per cent. Core inflation declined to 18.69 per cent from 19.53 per cent, representing a 0.84 per cent decrease.

This was attributed to the sustained naira appreciation in the official window, the return of stability in the energy market and improved food supply from ongoing harvests. The sustained disinflation, analysts said, has created an opening for the Committee to adjust its policy rate without jeopardising gains achieved in stabilising prices.

Analysts at Cardinal Stone, noting that the sustained decline signals firmer price stability, reduced cost pressures, and improving macroeconomic conditions in Nigeria, said they anticipate that the Committee will implement a 100-basis-point rate cut, which would mark the second rate cut this year. This projection is supported by the clear disinflation trend and continued exchange rate stability.”

Pointing out that Nigeria’s disinflation has been notable for its steady pattern, the analysts noted that inflation in November is expected to continue its downward trend as stable prices in fuel, energy, and transportation, combined with the ongoing harvest season, help ease food costs.

For analysts at Afrinvest West Africa, the October numbers consolidate the argument for a modest easing, noting that the naira has now gained for six straight months due to reforms in the foreign exchange market.

In an emailed note, the firm said, the currency’s stability “has played a significant role in the disinflation trend,” adding that further improvement is expected as the harvest season progresses and global oil prices moderate.

Afrinvest analysts, while projecting a further decline in inflation to 15.8 per cent in November, said minimal risks in the near term, combined with stronger GDP projections of between 3.8 and 4.3 per cent for the third quarter, give the MPC room to cut the policy rate by “25 to 50 basis points” at the end of its two-day meeting this week.

Similarly, analysts at Parthians Partners noted that inflation is expected to continue its gradual downward path in the near term, supported by improving macroeconomic fundamentals. “This disinflationary trend will be a key consideration for the Monetary Policy Committee (MPC) at its ongoing meeting. In view of the sustained moderation in price pressures, we anticipate that the MPC may opt for a further 50 bps reduction in the Monetary Policy Rate (MPR),” they said.

While calling for caution in implementing further rate cuts, analysts at FBN Quest noted that “An aggressive policy easing could erode attractive interest rate differentials and fuel inflationary pressures. That said, our take is that the MPC is likely to implement a 25–50bps rate cut.”

Putting into consideration, analysts at Cowry Assets management note that, “with businesses still grappling with high operating costs and consumers under pressure, a further 50bps reduction in the MPR appears likely.

“The MPC is clearly trying to strike a balance, supporting economic activity without losing sight of inflation dynamics in an economy that is still adjusting to multiple structural constraints.”