MPC: Firms Predict Interest Rate Hold as Macro Stability Takes Priority
Nigeria is expected to prioritise macroeconomic stability by keeping its monetary policy rate (MPR) at 26.5% at the end of the Central Bank of Nigeria (CBN) Monetary Policy Committee (MPC) meeting this week.
The committee will meet on Monday to review Nigeria’s economic position and key macro indicators in line with global developments, with a key focus on the benchmark interest rate and bank credit control measures.
Nigeria has continued to maintain monetary policy tightening to anchor the elevated headline inflation rate, with a significantly higher policy rate, while the private sector groans under heavy borrowing costs.
Inflation eased marginally to 15.91% year-on-year in June 2026, down from 15.93% in May, a 2-basispoint decline and a reversal of the inflation uptick seen since March, when heightened geopolitical tensions in the Middle East pushed up domestic energy costs.
“The June inflation reading further strengthens the case for the MPC to maintain its current policy stance at the July meeting. Although inflation continues to moderate, elevated food inflation suggests that underlying price pressures remain sticky.
“We expect the MPC to retain MPR at 26.50% and leave other policy parameters unchanged, allowing the cumulative effects of previous tightening measures to continue filtering through the economy”, Cowry Asset Limited said.
The latest reading broadly aligns with market expectations, reflecting the combined effects of favourable base effects, easing domestic energy prices, and relatively stable macroeconomic conditions.
On a month-on-month basis, headline inflation moderated to 1.66% from 1.75% in May, suggesting that the pace of increase in consumer prices slowed during the review period.
Although inflation remains substantially below the 25.29% recorded in June 2025, the latest print indicates that the disinflation process is becoming more gradual.
The moderation was primarily driven by softer core inflation and improved macroeconomic stability. Core inflation eased to 15.92% year-on-year, while the month-on-month reading slowed to 1.66% from 1.94% in May, reflecting a moderation in underlying consumer price pressures.
The continued stability of the foreign exchange market also helped contain imported inflation and dampened broader pricing pressures across the economy.
A key driver of the softer inflation outcome was the easing in domestic energy costs. During the month, Dangote Refinery implemented a cumulative N200/litre reduction in petrol prices to approximately N1,075/litre, following the normalisation of global oil shipping routes amid progress in US-Iran diplomatic negotiations.
The decline in fuel prices lowered transportation and logistics costs, contributing to the third consecutive moderation in monthly headline inflation
“We maintain our base case that the MPC will hold the MPR at 26.5%. Recent data point to renewed upside risks to inflation alongside relative exchange rate stability”, FSDH Research said.
The firm said at this stage of the policy cycle, the Committee is likely to prioritise consolidating macroeconomic stability rather than resuming tightening or immediately extending the easing cycle.
“Maintaining the current policy rate would help anchor inflation expectations, preserve positive real returns, support exchange rate stability, and allow earlier policy actions to continue to transmit through the economy”.
The Naira has remained broadly stable, while stronger reserves and sustained capital inflows have improved the external backdrop. However, continued sensitivity to global risk sentiment, portfolio flow reversals and oil market volatility supports a cautious approach.
Potential election-related fiscal and liquidity pressures also remain relevant, although limited fiscal and budget execution data make their scale difficult to assess.
Overall, the balance of risks favours a hold, FSDH said, adding that renewed inflation pressures make an immediate cut less likely, while stronger reserves, relative FX stability and the supply-side nature of recent price pressures weaken the case for a further rate increase.
The Committee is therefore likely to retain a wait-and-assess stance, with further easing deferred until there is clearer evidence that food and energy pressures are subsiding, the firm said.
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