MON SEPT 22 2025-theGBJournal| As the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) begins its rate decision meeting today, analysts expect the MPC to reassess its current policy stance on interest rate, given the sustained improvements seen in key indicators (inflation and the exchange rate) and the more positive outlook since their last meeting July 21-22, 2025.
Since then, global monetary easing has gained momentum, largely reflecting rising downside risks to growth and employment activities, while trade tensions have remained relatively subdued.
On the domestic front, inflation has continued to moderate, and the naira has remained relatively stable.
Given recent developments, analysts at Cordros Research tells theG&BJournal that they anticipate that the MPC may revisit its current policy stance.
”With key macroeconomic indicators suggesting improved stability, the Committee could begin a gradual transition toward monetary easing,” Cordros said.
”However, any shift is likely to be cautious. We project a 50bps cut in the Monetary Policy Rate (MPR) while maintaining other parameters, signalling a measured effort to foster economic growth while maintaining its commitment to price and exchange rate stability.”
Meanwhile, headline inflation eased for the fifth consecutive month, declining sharply by 176bps to 20.12% y/y in August (July: 21.88% y/y).
The slowdown was driven by softer price pressures in both food (21.87% y/y vs. July: 22.74% y/y) and core sub-items (20.33% y/y vs. 21.33% y/y).
Furthermore, external reserves strengthened in recent weeks, with a YTD accretion of 2.5% to USD41.89 billion (as of 16 September), supported by gradual improvements in oil receipts, reduced CBN FX interventions, and steady diaspora remittances.
Overall, the naira exchange rate with the US Dollar averaged NGN1,532.87/USD in August, appreciating to NGN1,484.00/USD on 16 September before closing at NGN1,494.00/USD (18 September).
Elsewhere, For the first time in 2025, the US Federal Reserve lowered the federal funds rate, after five consecutive sessions of holding rates steady, cutting the policy rate by 25bps to a range of 4.00%–4.25% at its September meeting.
The decision reflects the Fed’s increasing focus on labour market weakness, as rising unemployment risks outweigh lingering inflationary pressures. Specifically, the US unemployment rate climbed to 4.3% y/y in August, its highest level in nearly four years, while non-farm payroll growth slowed sharply to 22,000 from 79,000 in July.
Notably, the Committee signalled the likelihood of two further rate cuts before year-end, revising its policy rate projection downwards to 3.60% from 3.90%.
Elsewhere, the Bank of England cut its benchmark rate by 25bps to 4.00% in August, citing subdued growth and a weakening labour market, but held it steady in September amid concerns over upside risks to medium-term inflation.
The European Central Bank maintained its key policy rates, including the deposit, main refinancing operations, and the marginal lending facilities, at 2.00%, 2.15%, and 2.40%, respectively, at the September policy meeting, marking the second consecutive period after a cumulative 100bps decrease this year.
The decision to keep rates steady was driven by the need to balance easing inflation with resilient economic conditions and external uncertainties.
X-@theGBJournal|Facebook-the Government and Business Journal|email:gbj@govbusinessjournal.com|govandbusinessj@gmail.com
