Monetary Policy Committee Meeting: Analysts Divided Over Need For Rate Cut

As the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) sits this week for its September meeting, fiscal analysts stay divided connected whether the clip is ripe to easiness the choky monetary stance that has been successful spot for implicit a year.

While immoderate marketplace watchers reason that the improved fundamentals connection the CBN a model to chopped the benchmark Monetary Policy Rate (MPR) from its existent 27.5 per cent, projecting a 50 ground constituent cut, others caution that the system is inactive excessively fragile to accommodate assertive easing.
Ayokunle Olubunmi, caput of Financial Institutions Ratings astatine Agusto & Co., warned against rushing into an expansionary stance. He maintained that though the numbers look better, stableness is “still tentative.”
“Yes, determination are signs of comparative stability, but that stableness is inactive tentative, and it whitethorn beryllium wiser to hold until the adjacent gathering earlier making immoderate important move.

If you besides way the Treasury bills market, you’ll announcement rates person been hard to prolong astatine little levels. Each clip they were reduced, an upward accommodation had to follow. That tells you cutting rates sends a beardown awesome of a displacement towards an expansionary stance, and I don’t judge the system is rather acceptable for that yet,” helium noted.

However, Cordros Capital, successful its pre-MPC note, projected a measured 50 ground points cut, arguing that the caller disinflation trend, speech complaint stability, and firmer economical maturation trajectory enactment a gradual argumentation recalibration.

“With cardinal macroeconomic indicators suggesting improved stability, the Committee could gradually modulation toward monetary easing. However, immoderate displacement is apt to beryllium cautious. We task a 50bps chopped successful the Monetary Policy Rate, signalling a measured effort to foster economical maturation portion maintaining its committedness to terms and speech complaint stability,” Cordros stated.

Cowry Assets Management echoed a akin but guarded sentiment, noting that, portion inflation’s crisp moderation successful August could supply country for a imaginable argumentation shift, perchance adjacent a symbolic complaint cut, residual risks from forex pass-through, nutrient proviso bottlenecks, and volatile lipid prices whitethorn inactive compel the Committee to tread carefully.

“For astir of 2025, the MPC has opted for caution, holding the benchmark complaint dependable astatine 27.50 per cent to anchor expectations. Still, the crisp moderation successful header ostentation successful August could supply country for a imaginable argumentation shift,” Cowry Research noted.

Nigeria’s header ostentation slowed to 20.12 per cent successful August from 21.88 per cent successful July, driven by softer terms pressures successful some nutrient and halfway sub-indices. Analysts expect the inclination to persist arsenic the main harvest play and unchangeable vigor prices reenforce disinflation.

On his part, the main enforcement of the Centre for the Promotion of Private Enterprise (CPPE), Dr. Muda Yusuf said, the latest ostentation figures bespeak that the system is yet stabilising aft the shocks of caller reforms. He truthful urged the CBN to see relaxing its choky monetary grip.

“It is simply a bully happening that we are seeing accordant deceleration successful the ostentation rate. It is an denotation that the system is stabilising and recovering from the shocks of the reform. It is besides a reflection of the level of assurance investors person successful the economy,” Yusuf said.

Yusuf besides drew attraction to the widening spread betwixt MPR and inflation, insisting that, it is clip to statesman to adjacent it. “Right now, the Monetary Policy Rate is astir 27.5 per cent, portion ostentation has dropped to astir 20 per cent. You tin spot the gap, truthful we request to statesman to adjacent it. It’s clip to astatine slightest gradually easiness the monetary argumentation stance,” helium advised.