Analysts project cut in interest rate to 26% by 2025-end

Given a more favourable macroeconomic backdrop, a group of analysts at Cordros Research have hinted of the possibility that Monetary Policy Committee (MPC) of Central Bank   of Nigeria (CBN) may cut interest rate by 100 basis points to 26 per cent from 27 per cent, while keeping other parameters constant.

The MPC of the apex banking regulating body will hold its final meeting of the year on 24–25 November 2025.

According to analysts at Cordros Research, the recent developments suggest scope for a slightly deeper round of easing than the 50basis cut delivered in September 2025.

They noted that headline inflation has decelerated more sharply than earlier in the year. Inflation moderated by 211basis points to 18.02 per cent y/y in September from 20.12 per cent y/y in August before falling to 16.05  per cent y/y in October.

“This improvement reflects a favourable base effect, better main harvest outcomes, naira appreciation, and the partial unwinding of earlier supply-side price shocks.

“The composition of disinflation is also broadly encouraging. Food inflation fell markedly to 13.12 per cent y/y (vs September: 16.87 per cent y/y; August: 21.87 per cent y/y), while core inflation eased to 18.69 per cent y/y (vs September: 19.53 per cent y/y; August: 20.33 per cent y/y), indicating softer price pressures across both food and non-food components.

“Although the month-on-month outturn ticked up slightly to 0.93 per cent m/m (August: 0.74 per cent m/m), the overall trajectory still points to moderating underlying inflationary pressures compared with the same period a year earlier. With the currency remaining stable, fuel prices steadying, and the main crop harvest ongoing, the moderation in headline inflation is expected to extend into November.”

On robust FX inflows and reserves anchor naira stability, they stated that the  naira extended its recent gains over the review period, supported by stronger foreign portfolio inflows and still-subdued import demand.

“Total inflows into the Nigerian Foreign Exchange Market (NFEM) climbed to a five-month high of N5.15 trillion in October, reversing September’s decline (-5.7per cent m/m to $3.18 billion). Foreign portfolio investors were the main driver, as inflows surged by 120.7per cent m/m to $2.94 billion, accounting for 57.1per cent of total market receipts.

“Local FX supply also strengthened, rising by 28.4per cent m/m to $1.83 billion, boosted by a sharp jump in transactions from individuals (+370.6per cent m/m) and non-bank corporates (+30.8per cent m/m), alongside a modest increase in exporters’ proceeds (+7.2per cent m/m). In contrast, inflows from the CBN fell by 60per cent m/m, in line with the shift toward more market-driven price discovery.

“Against this backdrop, the naira appreciated by 2.8per cent m/m against the US dollar in October, averaging N1,460.35/USD (September: N1,501.38/USD) and trading within a tighter N1,431.00 – 1,451.00/USD range so far in November. Year-to-date, the currency has gained around six per cent.

“External buffers have improved in tandem. According to the CBN Governor, the gross FX reserves reached $46.70 billion as of 14 November, implying a year-to-date increase of 18.5per cent. The build-up has been driven by stronger oil inflows, robust FPI receipts, measured CBN intervention and the successful issuance of the $2.35 billion Eurobond on 5 November.”

According to them, the  resilient foreign exchange liquidity and firm market confidence should keep the naira broadly stable, with the exchange rate projected to close the year at around N1,450.00/USD, assuming no major shock to global risk sentiment or oil prices.

They added that the MPC has maintained a cautious posture on interest rate adjustments in previous meetings, despite persistent disinflation and naira stability.

“This restraint largely reflects the slow pace of inflation moderation alongside elevated global uncertainties, amplified by higher global tariffs and uneven risk sentiment.

“Although the MPC, for the first time in over five years, initiated an easing cycle by cutting the MPR at the September policy meeting, the modest 50bps reduction and the Committee’s guarded tone underscored its aim to avoid premature policy relaxation,”they added.