As reactions continue to trail the decision by the Central Bank of Nigeria’s (CBN) Monetary Policy Committee (MPC) to hold all policy parameters unchanged at its meeting, last Thursday, analysts at Comercio Partners have said that they are not expecting any hike in the benchmark interest rate-the Monetary Policy Rate (MPR) this year.
Commenting on the outcome of the MPC’s meeting, which held about forty eight hours after the National Bureau of Statistics (NBS) released rebased Consumer Price Index (CPI) data that showed headline inflation declining sharply to 24.48 per cent in January 2025, from December 2024’s 34.80 per cent, the analysts said that with market expectations for inflation, “cooling off,” they believe that the MPR has “peaked” and that there will be, “no more hikes in 2025.”
In fact, the analysts said that the MPR was only likely to head south, and that “if inflation keeps dropping on a Month-onMonth (MoM) basis through May, expect the first rate cut before mid-year.”
They further stated: “While no rate cut happened this time, the groundwork is being laid for one later in the year. If inflation stays on a clear downward path, the MPC will have no choice but to loosen the screws.
Keep your eyes on the MoM figures—that’s where the real story lies.” They also pointed out that the apex bank, under the leadership of Olayemi Cardoso, “is going all-in on orthodox monetary policy, meaning rate adjustments will be 100 per cent tied to inflation trends.”
Noting that, “as long as inflation continues to decline month-on-month, a rate cut will be on the table,” the analysts said that a rate cut before June, “would boost growth, ease credit conditions, and solidify Nigeria’s trillion-dollar economy trajectory.”
They noted that although the MPC was satisfied with the progress recorded by the CBN in its battle to curb inflation and ensure exchange rate, which resulted in the committee voting to retain the MPR at 27.5 per cent, the Asymmetric Corridor at +500/-100, the Cash Reserve Ratio (CRR) at 50 per cent for deposit money banks (DMBs) and 16 per cent for Merchant Banks and the Liquidity Ratio at 30%, “the CBN isn’t rushing to celebrate just yet (because) while inflation is cooling, food inflation remains the biggest threat.”
The analysts, however, noted: “Federal Government’s push for agricultural incentives and improved security in food-producing regions is expected to bring food inflation down soon.
