The Central Bank of Nigeria (CBN) is expected to cut the benchmark interest rate by at least 50 basis points, in continuation of the apex bank’s cautious monetary easing stance.
With a stable naira and rising foreign exchange (forex) reserves, the gradual reduction in benchmark lending rate could translate to direct gains for businesses and consumers through reduced costs and relative pricing.
The Monetary Policy Committee (MPC), the highest policy-making organ of the apex bank, begins a crucial two-day meeting today with decision on the basic interest rate as the main agenda.
Most analysts indicated that the apex bank would hold the benchmark interest rate, the Monetary Policy Rate (MPR), unchanged at 27.50 per cent, in preference for a more discernible consumer prices’ trend.
The MPC, headed by the Governor of the CBN, traditionally provides monetary policies and benchmarks, which determine the direction of the financial services sector, and the economy to a large extent.
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Economic intelligence reports and think tanks, which had previously correctly tracked the apex bank’s position, yesterday were unanimous that the MPC could continue its policy easing stance, given the improvements in macroeconomic environment.
The MPC had at its September 2025 meeting cut the Monetary Policy Rate (MPR) by 50 basis points from 27.50 per cent to 27.00 per cent, its first rate cut in five years.
Analysts said the apex bank could reduce the MPR to between 26.50 per cent and 26.00 per cent citing the continuing disinflationary trend, stability in the forex market, rising foreign reserves and stronger inflows from foreign investors.
The National Bureau of Statistics (NBS) reported that headline inflation recorded a sharp decline of 196 basis points from 18.02 per cent in September 2025 to 16.05 per cent in October 2025, the seventh consecutive decline in a sustained disinflationary trend that started since April 2025.
Experts generally expected the disinflationary trend to continue, despite traditional uptick in food purchases and other activities during the December festive period and the gradual ending of the harvest period. Inflation rate is projected to close the year around 14.00 per cent.
The naira opens today at N1, 457.38 per dollar. Gross foreign reserves rose by $476.43 million to close weekend at $44.12 billion, eighteenth consecutive weekly increase.
Economic intelligence reports and think tanks that were surveyed included Cordros Capital, Coronation Capital, Afrinvest West Africa, GTI Capital Group, Arthur Steven Asset Management, FSDH Group and SCM Capital among others.
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Afrinvest stated that macroeconomic outlook supports a dovish call and further cut in the MPR.
“Given minimal risks ahead, especially following the suspension of the proposed 15.0 per cent tariff on petrol and diesel imports, we expect the positive inflation dynamics, relative forex stability, and firm Gross Domestic Product (GDP) growth expectation, Afrinvest projection for third quarter 2025 of between 3.8 and 4.3 per cent, to support a dovish call at the MPC meeting scheduled for between 24 and 25 November,” Afrinvest stated.
Cordros Capital stated that the current macroeconomic dynamics provide enough basis for a more expansive cut of up to 100 basis points.
“For us, recent developments suggest scope for a slightly deeper round of easing than the 50 basis points cut delivered in September. Globally, financial conditions have eased further following another US Fed rate cut in October, while geopolitical tensions have remained contained. Additionally, the recent US–China trade agreements have helped reduce uncertainty. Domestically, inflation has decelerated more sharply, and forex liquidity has remained robust, with the naira showing strength on the back of the aforementioned. Given a more favourable macroeconomic backdrop, we expect the MPC to adopt a firmer easing bias and lower the Monetary Policy Rate (MPR) by 100 basis points to 26.00 per cent, while keeping other parameters constant,” Cordros Capital stated.
Analysts said they expected the naira to remain stable as forex liquidity remains robust.
“We expect the healthy forex reserves, favourable current account position, and firmer global monetary easing to reinforce foreign investor sentiment and stimulate forex market inflows,” Cordros Capital added.
Cordros Capital pointed out that while the cautious rate cut in September was on the background of the restrained environment, the balance of risks has shifted meaningfully since then.
“For us, a more favourable global backdrop, faster domestic disinflation, and sustained naira appreciation collectively strengthen the case for a more decisive monetary easing stance. Given these improvements, we believe the MPC is now in a stronger position to extend the easing cycle and could opt for a 100 basis points cut in the MPR to support growth while still keeping its inflation goals in focus. This would bring the MPR to 26.00 per cent by year-end. On the other hand, we expect all other policy parameters to be retained, reflecting the Committee’s preference for a measured and orderly recalibration of monetary conditions,” Cordros Capital stressed.
Arthur Steven Asset Management said rate cut call was underpinned by continued disinflation and relative exchange-rate stability, noting that a further rate reduction could enhance market liquidity and support investor confidence.
Analysts said sectors such as consumer goods stand to benefit from a lower interest-rate environment and may deliver stronger earnings in fourth quarter 2025.
FSDH said the fall in inflation rate reinforced the case for a gradual policy easing cycle, provided forex stability and supply-side gains are sustained into fourth quarter.
Analysts said lower interest rates could lower borrowing costs, with ripple effects across the economy.
