The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) is expected to keep the benchmark interest rate unchanged at 26.25% as it begins its two-day policy meeting today.
Analysts believe the MPC will also maintain all other policy parameters, including the asymmetric corridor, Cash Reserve Ratio (CRR), and Liquidity Ratio.
The decision is expected to be influenced by a slight improvement in inflation figures, with the headline inflation rate slowing to 32.15% year-on-year in August, down from 33.40% in July. Food inflation also eased to 37.52%, the lowest in seven months. Despite these positive trends, the rising price of petrol remains a concern, potentially pushing inflation upward in the near term.
Analysts from Afrinvest West Africa Limited have predicted a “hold” decision, citing that further rate hikes could burden consumption, production, and government borrowings. Cordros Securities analysts echoed this sentiment, pointing to the need for caution given volatile naira fluctuations and persistent foreign exchange demand pressure.
On the global front, declining interest rates may attract foreign investments into emerging markets like Nigeria. This, combined with efforts by the CBN to stabilise the naira, could provide some economic relief.
Despite these improvements, the MPC is expected to acknowledge ongoing risks, including disruptions from the energy sector and potential inflationary pressures linked to higher fuel costs.
A pause in interest rate adjustments has also been recommended by Prof. Anthony Kila, who noted that the impact of rate changes on the broader Nigerian economy remains limited. He emphasized that foreign exchange rates, rather than interest rates, have a more direct effect on most Nigerians.
The MPC’s decision will ultimately balance these domestic and global factors to support economic stability.
