Ahead of the Central Bank of Nigeria’s Monetary Policy Committee (MPC) meeting scheduled for July 22, 2025, analysts are broadly projecting a hold on the Monetary Policy Rate (MPR), currently at 27.5%.
The consensus reflects cautious optimism over moderating inflation and exchange rate stability, tempered by ongoing risks to growth and price pressures in key sectors.
Most analysts expect the committee to keep all key monetary parameters unchanged—MPR at 27.5%, Cash Reserve Ratio (CRR) at 50%, and Liquidity Ratio (LR) at 30%—citing the need to consolidate gains from previous hikes while sustaining investor confidence.
However, a few anticipate a slight rate cut to 27.25%, alongside an adjustment to the asymmetric corridor, to signal a fine-tuning approach as macroeconomic conditions evolve.
An executive Banker, Samuel Adonduwa Onche, expects the CBN to sustain a high-interest rate environment to keep inflation in check and reduce excess demand.
“I do not expect the government to loosen monetary policy at this time. The CBN is expected to hold a high MPR to suppress demand and slow price growth.”
Onche points to the federal government’s year-end inflation target of 15% as a policy anchor, suggesting that a marginal reduction to 27.25% could be on the table—but only if paired with a wider asymmetric corridor of +500/-100bps. CRR and LR are expected to remain unchanged.
“It appears to me that we are seeing a resurgence in food inflation due to seasonal effects, ongoing security issues, as well as increased energy costs linked to the Israel-Iran crisis. On the other hand, the relatively stable FX exchange rate should also be a major consideration,” he said.
“All told, my expectation is that the MPC will either maintain the MPR at the current rate or keep all parameters unchanged.”
“The MPC will likely be cautious and watch inflation and FX trends closely before considering a cut,” he said.
He notes that the positive spread between inflation and the MPR supports investor interest and reduces the pressure to act pre-emptively.
“Although inflation remains elevated, it is beginning to slow, suggesting that earlier rate hikes are starting to take effect.”
He emphasized that exchange rate stability reflected in the naira’s performance around N1,524/$ and improved FX reserves to support a non-interventionist approach. But he warned that raising rates further may dampen the nascent recovery in the real sector.
“High interest rates are already weighing heavily on manufacturing and other productive sectors. Further hikes could do more harm than good at this point.”
The July 2025 MPC meeting comes at a delicate moment. While headline inflation is slowing and FX volatility has reduced, underlying structural issues—including insecurity, food supply shocks, and weak real sector credit—persist.
The July 2025 MPC meeting comes at a delicate moment. While headline inflation is slowing and FX volatility has reduced, underlying structural issues—including insecurity, food supply shocks, and weak real sector credit—persist.
A policy hold remains the base-case scenario. However, a marginal rate cut, coupled with corridor adjustments, may be used to subtly recalibrate the CBN’s monetary stance without appearing dovish.
Unless data shows stronger evidence of broad-based disinflation and improved credit transmission, the committee is expected to remain cautious, prioritizing macroeconomic stability over short-term growth stimulus.