Central Bank of Nigeria leaves rates unchanged in July

Central Bank remains on hold: At its meeting on 21–22 July, the Central Bank of Nigeria (CBN) decided to maintain its policy rate at 27.50%. The hold was the third successive and aligned with market expectations.

CBN aims to sustain disinflation: The CBN stayed put to push down inflation more. The CBN noted that annual inflation rates have eased in recent months, mainly due to lower energy prices and stability in the foreign exchange market. However, month-on-month price pressures picked up in June. Moreover, the Bank highlighted concerns about the impact of tariff wars and geopolitical tensions on supply chains and the prices of imported items.

Rate cuts loom: The Bank did not provide explicit forward guidance on future interest rate movements. All our panelists expect the CBN to reduce rates by end-2025, with projections ranging from 125 to 350 cumulative basis points cuts. Unexpected naira weakness poses an upside risk to rates. The next meeting is set for 22–23 September.

Panelist insight: Analysts at the EIU commented: “We have previously mentioned that a decision to hold rates steady would be a promising sign of a more hawkish era in monetary policy […]. It is likely that in 2025 the CBN will cut rates by a smaller magnitude than our previous projection (of 500 basis points in total). We still expect loosening as global tariff fears abate, but will revise our forecast to a more modest 250 basis points in cuts over 2025, spread between September and November.”

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