CBN May Cut Interest Rates Amid Cooling Inflation

Analysts project that the Central Bank of Nigeria (CBN) will consider interest rate cuts during the upcoming Monetary Policy Committee (MPC) meeting, driven by a decline in inflation and a stronger naira. The headline inflation rate eased to 15.10% year-on-year, down from 15.20% in December, indicating a sustained disinflation trend.

The naira has appreciated approximately 8% against the dollar year-to-date, bolstering confidence in the economic outlook. Analysts, including Ayokunle Olubunmi from Agusto & Co. and Lukman Otunuga from FXTM, suggest that while a cautious approach is necessary to prevent renewed inflationary pressures, a reduction of up to 100 basis points in the Monetary Policy Rate (MPR) to 26.00% is plausible.

The MPC is expected to maintain a cautious stance, balancing growth support while managing liquidity and macroeconomic risks, particularly as political activities increase ahead of elections.