The Monetary Policy Committee (MPC) of the Central Bank of Nigeria begins its final meeting of 2025 today with financial markets broadly anticipating a reduction in benchmark interest rates following months of easing inflationary pressure and improving exchange rate stability.
The two-day meeting is expected to evaluate macroeconomic conditions across the final quarter of the year, review the impact of previous tightening cycles, and determine the appropriate policy stance to support financial stability in 2026.
Market analysts polled across local and international institutions project that the Committee will deliver an interest-rate cut in excess of 100 basis points, driven largely by the sustained moderation in headline inflation and relative calm in the foreign exchange market.
Many analysts believe the MPC now has sufficient room to ease monetary conditions after a prolonged period of restrictive policy aimed at suppressing inflation and restoring confidence in the currency.
Investment banks, research houses and rating analysts say the most recent inflation trend has strengthened the argument for a measured reduction in the policy rate.
Nigeria’s inflation, while still high, has shown consistent moderation in recent months, supported by stabilised food supplies, better foreign exchange flows and improved liquidity in the official market.
FX volatility has also declined, reducing one of the major risks that previously constrained the MPC from loosening policy.
Economists note that several members of the analyst community expect the rate cut to fall within a range of 100 to 200 basis points, while a minority foresee a more aggressive reduction depending on the Committee’s assessment of real-sector activity.
A handful of analysts are projecting smaller adjustments of 25 to 50 basis points, citing the need for caution given the lingering sensitivity of investor sentiment.
Institutional research desks argue that any easing will likely reflect the MPC’s confidence in the disinflation trajectory and external-reserve stability.
Some analysts also expect the Committee to revisit reserve-management tools such as the Cash Reserve Requirement, which has remained elevated after a series of tightening cycles.
Despite moderating inflation, policy experts warn that the Committee faces several constraints as it weighs the appropriate level of easing.
Inflation remains outside the CBN’s medium-term target, and uncertainties around global financial conditions, domestic fiscal pressures and pre-election sensitivities could influence the final decision.
Many analysts expect the MPC to avoid any drastic action that could unsettle the bond market or trigger capital outflows.
Market participants will be monitoring today’s deliberations for forward guidance on the policy direction for 2026, especially as the economy enters a phase where stable borrowing costs are needed to support investment, manufacturing output and credit expansion.
The outcome of the meeting, to be announced on Tuesday, is widely regarded as one of the most consequential decisions of the year, setting the tone for Nigeria’s monetary policy framework heading into 2026.