Nigeria Monetary Policy Committee dey meet dis week. Di committee dey face one tight dilemma. E go reward three months of cooling inflation with rate cut, or e go hold strong against high global oil prices and pre-election liquidity? Dat na di question.
Headline inflation cool to 15.39 percent in August. Na small drop from 15.43 percent in July and 15.91 percent in June. Di trend show say disinflation dey sustained. Monthly numbers dey talk more. Month-on-month inflation slow to 0.71 percent in August from 1.57 percent in July. Na di lowest pace dis year. Core inflation fall to 13.29 percent from 14.97 percent. Food inflation drop to 19.57 percent. Na first fall in six months. Food monthly rate also drop sharply to 1.02 percent from 5.56 percent. Together, di figures give stronger disinflation signal pass wetin committee see for im previous two meetings.
Gross external reserves stand at $54.209 billion on September 7. Remittances through licensed operators reach record $947 million in July. Money market sef dey move for direction wey consistent with lower rates.
Despite dese indicators, market consensus favor cautious hold. Recent escalation for Middle East don push Brent crude above $100 a barrel. Dat one threaten to import fresh wave of energy-driven inflation. Di external shock don already dey reach citizens on ground. Dangote Refinery recent petrol pump price hike to N1,350 per litre na evidence. Analysts warn say soaring transportation and logistics costs, plus inevitable surge in political spending ahead of election cycle, fit easily erode di hard-won disinflationary gains.
Razia Khan, managing director and Chief Economist, Africa and Middle East Global Research at Standard Chartered Bank, expect CBN to maintain policy rate at 26.5 percent in September. She talk say post-election easing go likely be preferred. Khan also say Standard Chartered expect Bank of Ghana to keep policy rate at 14.0 percent amid fuel price and foreign exchange risks, after im decision to hold rates in July. She talk say despite recent dovish comments, dem see SARB under pressure to tighten in September. Khan add say persistent fuel price pressures and uncertainty over Middle East conflict fit keep oil prices above $100 per barrel. Dat one go make sub-Saharan African central banks adopt cautious approach to monetary policy at dia upcoming meetings. She talk say with little end in sight to Middle East conflict and oil prices potentially supported above $100/bbl, dem expect SSA central banks to adopt cautious approach to monetary policy at next week MPC meetings. Dem see both CBN and Bank of Ghana on hold at 26.5 percent and 14.0 percent respectively. Dem previously see 200 basis points of additional easing in Ghana dis year. Dem see SARB raising policy rate by 25 basis points to 7.25 percent.
Ayodeji Ebo, chief executive officer of MDU Capital, talk say decline in headline inflation dey encouraging, but e still too early for CBN to cut interest rates. Food inflation remain elevated, while energy and transportation costs continue to put pressure on prices. CBN go most likely maintain im current stance until clearer evidence of sustained and broad-based moderation in inflation show.
For Abayomi Fashina, group risk manager at STL Capital, di combination of softer inflation and declining market rates don strengthen di case for cut. He talk say since inflation dey decline and interest rates dey drop across board, e dey expect 50-basis-point reduction in policy rate.
At 26.5 percent, di MPR now about 11.1 percentage points above August headline inflation. Di widening gap show how restrictive monetary policy don become relative to current inflation rate. But dat na also where di argument for holding begin.
For Faruq Quadri, economist at SPEC-Matrix, di risk be say renewed energy-price pressures fit begin feed into transport and other domestic costs, wey go erode recent disinflation gains. He talk say MPC likely hold rate at dis meeting because of renewed energy shock. Crude oil prices don rise sharply, and e dey already feed into transport fares. If dat persist, e fit reverse some gains wey we see in disinflation. Di approaching election cycle add another source of uncertainty, he talk, as higher liquidity fit complicate inflation outlook. He talk say election cycle likely move same direction as liquidity, putting additional pressure on prices. For dat environment, holding rate safer to avoid further distortions to price stability.
Adebowale Funmi, head of research at Parthian Securities, talk say decline in inflation to 15.39 percent dey promising but e never provide strong basis for rate cut. Dis na because pace of disinflation dey flattening and renewed Middle East crisis present upside risks through higher crude oil, energy and transportation costs. Therefore, dem expect CBN to remain in wait-and-see mode, leaving MPR unchanged at 26.5 percent. MPC go want see sustained disinflationary trend, alongside continued exchange-rate stability, before e start easing cycle.
One financial consultant, wey ask make dem no name am, talk say MPC likely maintain im current stance given impact of rising energy prices and anticipated pre-election spending on inflation.
Analysts at Quest Merchant Bank Limited talk say evidence of easing inflationary pressures and improving macroeconomic conditions don increase likelihood say MPC go begin consider policy easing cycle. However, di analysts talk say committee likely remain cautious, given still-fragile inflation outlook and need to ensure recent disinflation gains dey sustained. External risks also remain elevated, as heightened geopolitical tensions for Middle East don push global oil prices above $100 per barrel, raising risk of renewed inflationary pressures.
United Capital Research therefore expect MPC to hold policy rate at im current level while e continue to monitor inflation and broader economic trends. Central Bank of Nigeria, e talk, suppose also continue managing liquidity through Open Market Operations and other market-based tools. Dem expect MPC to maintain Monetary Policy Rate at 26.5 percent; retain Standing Facilities Corridor around MPR at +50/-450 basis points; maintain Cash Reserve Requirement for Deposit Money Banks at 45.0 percent; retain CRR for Merchant Banks at 16.0 percent; maintain Liquidity Ratio at 30.0 percent; and retain CRR on Non-Treasury Single Account public sector deposits at 75 percent.
Analysts at Coronation Merchant Bank talk say August inflation report reinforce dia view say Nigeria disinflation process remain on track, supported by easing food and core inflation. However, dem expect MPC to maintain cautious stance and hold MPR at im September 21–22 meeting, following recent rebound in global crude oil prices, with Brent crude now trading above $100 per barrel. Di analysts talk say sustained rise in oil prices fit translate into higher domestic fuel and transportation costs, potentially slowing pace of disinflation in coming months.
At im last meeting in July 2026, CBN retain Monetary Policy Rate at 26.5 percent. Di committee also retain Standing Facilities Corridor around MPR at +50/-450 basis points and maintain Cash Reserve Requirement for Deposit Money Banks at 45 percent, Merchant Banks at 16 percent and non-TSA public sector deposits at 75 percent. Olayemi Cardoso, governor of CBN, talk say committee decision to maintain current policy stance follow thorough assessment of balance of risks. Although headline inflation moderate marginally in June 2026, global uncertainties don heighten due mainly to renewed hostilities for Middle East. In view of evolving developments, maintaining cautious monetary policy stance remain appropriate, Cardoso talk.
