Financial analysts are offering divergent projections on the size of the interest rate adjustment ahead of the Central Bank of Nigeria’s final Monetary Policy Committee meeting for 2025, which began today and concludes on Tuesday.
While there is broad agreement that the Committee will ease its monetary stance following months of declining inflation and relative exchange rate stability, estimates of the size of the cut vary widely across research houses, investment banks and independent economists.
Some analysts expect a sizeable rate reduction of 150 to 200 basis points, arguing that current macroeconomic indicators provide sufficient room for more aggressive easing.
These analysts highlight the sustained moderation in headline inflation and more orderly foreign exchange conditions as factors that could encourage the MPC to accelerate monetary accommodation.
At the other end of the spectrum, several market strategists believe a much smaller adjustment is more likely, projecting a cut in the range of 25 to 50 basis points.
They caution that despite improving price stability, inflation remains well above the Bank’s medium-term target band, limiting the scope for rapid policy loosening. These analysts also point to investor sentiment risks and pre-election considerations as reasons for a cautious approach.
A third group of economists anticipates a mid-range adjustment of 100 basis points or slightly above, suggesting that the MPC may choose a balanced path that recognises the recent deceleration in inflation while also maintaining a firm anti-inflation posture.
Market experts note that the Committee will need to weigh recent improvements in macroeconomic indicators against lingering structural pressures, including elevated energy costs, weak output growth in several sectors and fiscal constraints that could complicate monetary easing.
The meeting is also expected to review liquidity conditions within the banking system, with some analysts forecasting potential adjustments to cash reserve requirements in the months ahead.
The financial markets are closely monitoring the MPC’s tone for signals on the Bank’s policy direction for 2026, especially as credit conditions remain tight and borrowing costs continue to affect business expansion and consumer demand.
Any deviation from analyst expectations could influence bond yields, banking-sector liquidity and investor appetite for naira assets.