The Central Bank of Nigeria’s Monetary Policy Committee (MPC) is expected to lower the Monetary Policy Rate (MPR) by 25 – 50 basis points at its 302nd meeting scheduled for September 22–23, 2025, as analysts cite easing inflation, naira stability, and global monetary trends as key drivers.
However, some experts caution that the apex bank may hold the benchmark rate at 27.50% to protect fragile economic stability and maintain policy credibility.
Headline inflation eased for the fifth consecutive month in August 2025, marking the steepest moderation since April.
The naira has also traded within a N1,480–N1,600 per USD band for six months, supported by improved foreign portfolio inflows and Central Bank interventions. Energy prices—once a major pressure point—have declined and remained stable, adding to expectations for a modest rate cut.
Global conditions reinforce the case for easing. The U.S. Federal Reserve’s rate cut on Sept. 17 has reduced global tightening pressures, giving the CBN more room to loosen monetary conditions without triggering capital flight.
Portfolio Manager at CFG Africa, Oyeshola Mosimiloluwa,
“At its 302nd MPC meeting, the CBN is expected to weigh price stabilization, lower inflation, and sustained foreign exchange stability.
Given that FX market stability has been supported by improved supply, partly from renewed foreign portfolio inflows, the U.S. Fed’s recent policy direction will be a key consideration. The Fed’s decision, which preceded the MPC meeting by less than a week, should provide the CBN with a clearer path to ease domestic rates. We envisage only a modest adjustment, with a cut within the range of 25–50bps.”
Head of Investment Management at Norrenberger Asset Management, Victor Onyema,
“The MPC is likely to opt for a modest cut of 25–50bps, most likely 25bps at this meeting. Inflation has moderated, and FX liquidity has improved, giving the Committee room to ease without jeopardizing price stability. A measured cut would balance growth support with maintaining investor confidence.
From a market perspective, a rate cut should spark positive momentum in fixed income, with yields compressing across the curve as investors reposition for an easing cycle. Fund managers may see opportunities to lock in yields before further adjustments, while managing duration risk.”
Equities Trader/Business Strategist at Rostrum Investment & Securities Ltd, Jessica Ifada,
“The CBN’s decision to hold the MPR at 27.50% for three meetings underscores its commitment to tightening monetary conditions to curb inflation and stabilize the naira while monitoring inflation, fiscal pressures, and global monetary trends. A shift is more probable in Q4 2025 if inflation accelerates or continues to ease sustainably.”
The inflation trajectory is one key consideration. Headline inflation remains above 20%, driven by food and transport costs, but month-on-month trends show moderation.
Exchange rate stability is another factor. The naira has traded between N1,480 and N1,600/USD for six months, supported by improved dollar inflows and interventions. Further hikes may not boost currency gains but would raise borrowing costs.
Growth concerns are essential. GDP growth remains fragile; additional hikes risk dampening credit and investment.
Growth concerns are essential. GDP growth remains fragile; additional hikes risk dampening credit and investment.
Policy credibility is not meant to be overlooked. Holding steady reinforces CBN’s anti-inflation stance without unsettling markets.
1. Declining headline inflation – five-month downward streak
Headline inflation has now fallen for the longest stretch of moderation since 2022. The August 2025 rate of 20.12% reflects a significant slowdown compared to July’s 21.88%, driven by softer food and energy prices. This trend suggests that earlier monetary tightening, fiscal adjustments, and improved supply dynamics are taking effect. A continued decline in inflation reduces the urgency for an aggressive anti-inflation stance, giving the CBN room to ease borrowing costs without stoking price pressures.
2. Naira stability – improved FX supply and stable official rates
The naira has traded within a N1,440/$ – N1,600/$ band in the official market since February this year, buoyed by improved foreign portfolio inflows, steady oil earnings, and targeted CBN interventions.
This relative stability contrasts with last year’s volatility, which saw wide fluctuations that unnerved investors. A stable exchange rate reassures the MPC that a modest rate cut is unlikely to trigger speculative pressure on the currency or undermine foreign investment flows.
3. External relief (the U.S. Federal Reserve’s rate cut)
The U.S. Federal Reserve’s recent interest rate cut has eased global financial conditions, reducing pressure on emerging markets like Nigeria to maintain high interest rates to protect against capital flight. With U.S. yields lower, the risk of foreign portfolio outflows from Nigeria diminishes, giving the MPC more flexibility to adjust rates downward. This external relief creates a window for the CBN to support domestic growth while keeping Nigeria attractive to international investors.
Although the CBN has tailored its rate adjustments to inflation over the past two years, it has kept the MPR unchanged since February 2025, brushing aside intermittent signs of economic softening. With headline inflation tapering for five consecutive months, and the economy stabilizing.
Market participants have consistently called for the apex bank to ease borrowing costs to stimulate credit growth and investment. Yet, the CBN has maintained a hawkish posture, prioritizing price stability and exchange-rate confidence over short-term growth. This conservative approach has supported FX stability but has also tightened liquidity for businesses and consumers, dampening private-sector expansion.
While many anticipate a reduction, the MPC could just as easily opt to hold at 27.50%, signaling its commitment to policy credibility and a gradual approach to easing. The September decision will not only test the Committee’s confidence in Nigeria’s fragile stability but also set the tone for monetary policy heading into the final quarter of 2025.