The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) is set for it’s meeting for the first time in 2025 on February 19 and 20. Analysts widely expect the committee to maintain the benchmark interest rate, also known as the Monetary Policy Rate (MPR), as economic factors continue to shape monetary policy decisions.
Initially scheduled for February 19, the meeting was postponed to allow the CBN to analyze Nigeria’s rebased Consumer Price Index (CPI), which remains a critical factor in determining inflation trends. The rebased CPI is yet to be released by the National Bureau of Statistics (NBS), fueling speculation about the data’s potential impact on policy decisions.
Analysts Predict No Change in Interest Rates
Most financial analysts believe the MPC will keep the interest rate steady, considering the need for the economy to adjust to previous rate hikes. In November 2024, the MPC increased the MPR by 25 basis points to 27.5 percent, a move aimed at stabilizing inflation and the foreign exchange market.
Razia Khan, managing director and chief economist for Africa and the Middle East at Standard Chartered, emphasized the importance of stability in the foreign exchange market. She warned that any premature easing of interest rates could undermine recent economic gains. She predicted that the CBN might consider reducing the MPR in the second half of 2025 if inflation declines faster than expected.
Similarly, Ayodele Akinwunmi, senior relationship manager at FSDH Merchant Bank, noted that the CBN could lower interest rates in the second quarter of 2025 if economic stability is sustained. However, he expects the MPC to keep rates unchanged at this meeting.
Bismarck Rewane, CEO of the Financial Derivatives Company, projected a slight decline in inflation but maintained that interest rates would likely remain at 27.5 percent in February. He stated that while the CBN prioritizes price stability, interest rates will stay above 20 percent in 2025, with policy easing expected by mid-year as inflation moderates.
Diverging Opinions on Rate Hike
While most analysts foresee no immediate changes, some experts hold a contrary view. Ayokunle Olubunmi, chairman of Agusto & Co.’s financial institutions ratings, believes the MPR will continue to rise but expects other policy metrics to remain stable.
JP Morgan, in its Emerging Market Frontier Local, 2025 report, predicts a 25-basis-point increase in the first quarter of 2025, bringing the MPR to 27.75 percent. The international bank also anticipates another increase to 28 percent, after which the MPC is expected to maintain the rate for the rest of the year.
Inflation Trends and Policy Considerations
As previously analyzed on 9am News Nigeria, inflation trends remain a crucial determinant of monetary policy decisions. However, concerns have emerged regarding the timeliness of key economic data, particularly the rebased CPI, which was expected by the end of January but has yet to be released.
With inflation control at the core of the CBN’s strategy, the outcome of the upcoming MPC meeting will provide insights into Nigeria’s economic direction in the months ahead.
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