Central Bank of Nigeria leaves rates unchanged in February

CBN pauses monetary tightening, as expected: At its meeting on 19–20 February, the Central Bank of Nigeria (CBN) decided to retain the Monetary Policy Rate (MPR) at 27.50%. The decision aligned with market expectations and followed six consecutive hikes amounting to 875 basis points since Governor Olayemi Cardoso was appointed in late 2023.

Improving inflation outlook allows the Bank to hold: The Bank expects inflation to moderate ahead thanks to greater naira stability and a softening in fuel prices. That said, the CBN acknowledged that the risk of persistent inflationary pressures remains, mainly relating to food prices. Regarding the recent change in the consumer basket used to calculate inflation, the Bank stated that it is more reflective of current consumption patterns; this change pushed January’s figure to 24.5% from December’s 34.8% as it assigns a smaller weight to food.

Central Bank to cut rates this year: The Central Bank did not provide explicit forward guidance, stating only that it will continue to monitor both domestic and global developments to identify emerging risks to the economic outlook and propose appropriate policy responses. Our Consensus is for the CBN to reduce rates by around 225 basis points by end-2025, with the first cuts most likely in H2. A weaker-than-expected naira is an upside risk to rates. The next meeting is scheduled for 19–20 May.

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