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MPC Maintains Status Quo Amid Global Uncertainty

At its 300th committee meeting on May 20, 2025, the CBN took a cautious stance, maintaining the benchmark rate at 27.50% p.a. for the second consecutive time, after six hikes in the last 20 months. The decision aligns with market sentiment and aims to anchor inflation and exchange rate expectations amid global interest rate dynamics.

In the last 90 days, headline inflation eased by 77bps to 23.71% on lower fuel costs, the naira has maintained relative stability (depreciating only 0.49% since January to ₦1,623/$), and investor confidence is growing.

However, given global uncertainties, including weaker oil prices, a “wait-and-see” posture remains prudent to sustain monetary buffers in the near term. Notably, the naira, which remains undervalued (27%)—its fair value (₦1,166/$)—could slide toward ₦1,900/$, if oil prices fall below $50pb or fiscal discipline weakens.

Outlook: Cautious Optimism Amid Fragile Gains

As the administration marks two years in office on May 29, economic activity remains resilient, evidenced by rising electronic payment transaction volumes. Food prices may tick up due to seasonal factors, but stability in PMS prices could help lower logistics costs. However, increased structural investment remains essential for sustainable recovery.

These insights were unpacked by Bismarck Rewane on Channels TV’s News at Ten.

Please find the slides and video link attached.

Enjoy your read.