Interest rates cut likely as MPC meets today
The Central Bank of Nigeria (CBN) is expected to cut the benchmark interest rate as the apex bank enters a renewed phase of monetary easing to boost domestic productivity. Analysts’
The Central Bank of Nigeria (CBN) is expected to cut the benchmark interest rate as the apex bank enters a renewed phase of monetary easing to boost domestic productivity.
Analysts’ consensus yesterday indicated that the apex bank would at the end of its two-day meeting starting today reduce the benchmark interest rate by at least 50 basis points to 26.50 points.
The Monetary Policy Committee (MPC) is the highest policy-making organ of the apex bank. The interest rates will be core of discussions at the meeting.
The CBN Governor-led MPC traditionally provides monetary policies and benchmarks, which determine the direction of the financial services sector, and the economy to a large extent.
At its last meeting in November 2025, the MPC retained the Monetary Policy Rate (MPR) at 27.00 per cent, halting the trend that started with a cut from 27.50 per cent in September 2025.
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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 restart its policy easing stance, given the improvements in macroeconomic environment.
Analysts said continuing decline in inflation, rising external reserves, stable domestic currency, bullish corporate outlook and stronger fiscal position have made a perfect scenario for the apex bank to begin gradual reduction of interest rate.
They said the latest Executive Order signed by President Bola Ahmed Tinubu, which mandated direct remittance of oil and gas revenues to the Federation Accounts, has further strengthened the government’s fiscal position, lessening certain vulnerabilities that had been the concern of the apex bank.
Analysts at Afrinvest West Africa said the continuing disinflation has increased the possibility of a rate cut by the MPC.
Inflation rate had dropped to 15.10 per cent in January 2026 as against 15.15 per cent in December 2025. Notably, food inflation declined by 195 basis points from 10.84 per cent to 8.90 per cent while core inflation-all items less farm produce and energy, reduced by 91 basis points from 18.63 per cent to 17.72 per cent.
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Afrinvest also pointed at the latest data on capital importation, which saw a record improvement in inflows.
The third quarter 2025 data showed that capital inflows into Nigeria rose to $6 billion in third quarter 2025, an increase of 380 per cent compared to third quarter 2024. This marked the strongest quarterly inflow since $6.1 billion recorded in second quarter 2019. On a cumulative basis, the nine-month period ended September 2025 accumulated total inflows of $16.8 billion, the highest level since $20.2 billion recorded in the comparable period of 2019.
Analysts at Cordros Capital said they expected the apex bank to resume its easing cycle.
They noted that CBN’s composite Purchasing Managers’ Index (PMI) had indicated that economic activity remained firmly expansionary in fourth quarter 2025, with momentum concentrated in the non-oil sector.
The composite PMI rose to 57.6 points in December 2025 from 54.0 points in September 2025, reflecting broad based expansion across the agriculture, industry, and services.
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Cordros Capital noted that external reserves have sustained accretion, increasing by 6.6 per cent to $48.37 billion by February 17, 2026.
“Looking ahead, we expect the naira to maintain its strength, underpinned by sustained foreign portfolio inflows, attractive real yield differentials, and continued improvements in FX liquidity conditions. In addition, a supportive external backdrop and rising external reserves should enhance the CBN’s capacity to smooth volatility and reinforce investor confidence, thereby limiting the risk of abrupt currency pressures in the near term,” Cordros Capital stated.
Managing Director, AIICO Capital Limited, Dr Femi Ademola, said the Presidential Executive Order on direct remittance of oil and gas funds to Federation Account was a needed and timely action that should be commended.
“The revenue from the sale of the country’s resources belongs the federation and should therefore be treated as such. Hence, sending the funds directly to the Federation Account would remove unnecessary leakages and wastages; thus, making more funds available to the governments at the three tiers,” Ademola said.
