The Monetary Policy Committee (MPC), the highest policy-making organ of the Central Bank of Nigeria(CBN), begins a crucial two-day meeting today with a decision on the benchmark interest rate as the main agenda.
Many analysts expect the CBN to leave the benchmark interest rate, the Monetary Policy Rate (MPR), unchanged at 27.50 per cent, in preference for a more discernible consumer price trend.
The MPC, headed by the CBN governor, traditionally provides monetary policies and benchmarks, which determine the direction of the financial services sector and the economy to a large extent.
The National Bureau of Statistics (NBS) last week released its latest Consumer Price Index (CPI) report, showing that the headline inflation rate dropped by 52 basis points from 24.23 per cent in March 2025 to 23.71 per cent last month.
On a month-on-month basis, inflation also declined to 1.86 per cent in April, compared to 3.90 per cent recorded in March.
The decline in inflation rate was driven by a broad-based decrease in the prices of food items. Food inflation slowed by 53 basis points from 21.79 per cent in March 2025 to 21.26 per cent in April 2025. On a month-on-month basis, food inflation eased by 12 basis points from 2.18 per cent to 2.06 per cent.
Core inflation-which included all items excluding farm produce and energy, also declined by 105 basis points from 24.43 per cent in March 2025 to 23.39 per cent in April. On a month-on-month basis, core inflation dropped by 239 basis points from 3.73 per cent in March 2025 to 1.34 per cent last month.
Experts and sources close to the CBN said the MPC would rely on the side of caution and hold the rates and other parameters unchanged.
Analysts at Bismarck Rewane’s Financial Derivatives Company (FDC), Cordros Capital Group, Afrinvest West Africa and Arthur Steven Asset Management, among others, expect a cautious stance that would leave the MPR and all parameters unchanged.
However, analysts at Futureview said the apex bank could reduce the benchmark interest rate marginally. They expect inflationary pressure to reduce further in the next period.
Cordros Capital analysts said: “Since the last MPC meeting, the global economic landscape has grown increasingly volatile and uncertain, primarily driven by persistent trade protectionist policies in the United States.
‘’In our view, the MPC is likely to take these developments into account, particularly the elevated global uncertainty and its adverse implications for naira stability, despite a positive real rate of return, given the current inflation rate.
‘’Against this backdrop, we expect the MPC to adopt a cautious stance, leaving the Monetary Policy Rate (MPR) unchanged, alongside retaining all other policy parameters in a bid to anchor inflation expectations and maintain the naira’s attractiveness,”
The analysts said inflation risks were still tilted to the upside, particularly as the naira continues to experience gradual depreciation, reinforcing the need to anchor inflation expectations.
