Nigeria’s MPC Meeting: Experts Predict Cautious Stance Amid Inflation Concerns

As the Central Bank of Nigeria’s Monetary Policy Committee (MPC) prepares for its landmark 300th meeting on May 19-20, 2025, financial analysts anticipate a careful yet decisive policy outcome.

Policy Rate Likely to Remain Steady

Market observers widely expect the MPC to maintain the Monetary Policy Rate (MPR) at 27.5%, though a modest 25 basis point increase remains possible given persistently high inflation levels despite recent easing trends.

The committee previously held rates steady in February 2025, keeping key parameters unchanged:

• Liquidity ratio at 30%
• CRR for commercial banks at 50%
• CRR for merchant banks at 16%

Inflation Trends Show Mixed Signals

Recent data reveals a complex inflation picture:

• April 2025 headline inflation eased to 23.71% from 24.23% in March
• Food inflation declined to 21.26% from 21.79%
• Monthly inflation index rose from 117.34 to 119.52, indicating persistent price pressures

Expert Opinions Diverge on Policy Direction

Optimistic Views Favor Rate Hold

Olaitan S. Sunday, Managing Director at Rostrum Investment & Securities Ltd, sees improving conditions: “This downward trend reflects potential easing in household costs. Holding the MPR at 27.5% will support the Naira and bolster investor confidence.”

Damilare Asimiyu of Afrinvest notes cost improvements: “Exchange rate stability and Dangote Refinery’s fuel price reduction should modestly reduce business costs and improve purchasing power.”

Concerns About Policy Impact

Analysts on Nairametrics TV’s economic podcast raised concerns about CRR usage: “CRR is being misused for liquidity management rather than protecting depositors, significantly dampening private sector credit.”

David Adonri, MD of Highcap Securities, warns: “Demand-side pressure remains too strong relative to supply, requiring continued hawkish stance.”

Olabode Odunniga of Redwood Asset Management cautions: “Global uncertainties, including potential Trump tariffs, remain risks. Rate cuts unlikely before H2 2025.”

Nairametrics Outlook

Our analysis suggests the MPC will likely:

• Maintain MPR at 27.5% to consolidate recent stability
• Remain open to future adjustments if inflation reaccelerates
• Potentially implement a modest 25 basis point hike if needed

Market participants should watch for forward guidance about potential H2 2025 policy shifts.

Full credit to the original publisher: Nairametrics