Stakeholders in Nigeria’s financial sector have projected that the Central Bank of Nigeria (CBN) will retain its Monetary Policy Rate (MPR) at 26.5 per cent as the Monetary Policy Committee (MPC) begins its 306th meeting today in Abuja.

The consensus among economists, banking professionals and market analysts is that while inflation remains elevated, recent macroeconomic developments suggest that maintaining the current policy stance would allow the apex bank to assess the impact of previous monetary tightening measures before considering any further adjustments.

The MPC has maintained a tight monetary policy over the past two years, raising interest rates aggressively to curb inflation, stabilise the exchange rate and restore investor confidence.

At its last meeting, the committee retained the benchmark interest rate at 26.5 per cent alongside other monetary parameters.

President of the Capital Market Academics of Nigeria (CMAN), Prof. Uche Uwaleke, said he expects the committee to adopt a cautious approach by leaving all policy parameters unchanged.

According to him, the committee’s communication after its May meeting indicated that the recent increase in inflation was largely temporary and driven by external developments, particularly the spillover effects of the Middle East crisis on global energy prices and logistics costs.

“The MPC acknowledged that inflation had increased for two consecutive months but characterised the uptick as temporary and largely driven by external factors,” he said.

Uwaleke noted that despite the latest marginal drop in headline inflation to 15.9 per cent, the broader inflation trend still supports the committee’s earlier assessment that inflation could witness intermittent increases before resuming its downward trajectory.

He argued that unless there is clear evidence of persistent and broad-based inflationary pressures, particularly in core inflation, there would be little justification for another round of monetary tightening.

He further observed that Nigeria’s monetary conditions remain significantly restrictive, with the Monetary Policy Rate at 26.5 per cent, the Cash Reserve Requirement standing at 45 per cent for deposit money banks, and liquidity management measures already exerting considerable pressure on credit conditions.

According to him, monetary policy works with a time lag, meaning that previous rate increases are still filtering through the economy.

“Raising rates further at this stage could impose unnecessary costs on economic activity without delivering proportionate gains in reducing inflation,” he added.

The economist also identified exchange rate stability as another factor likely to influence the committee’s decision.

He explained that because a significant portion of Nigeria’s inflation has historically been imported through exchange rate depreciation, the relative stability recorded by the naira in recent months provides the CBN with some room to maintain its current policy stance.

“The exchange rate will also remain central to the MPC’s deliberations. Since much of Nigeria’s inflation has historically been imported through exchange rate depreciation, the relative stability of the naira in recent months has provided the CBN with some policy space,” he further explained.

Uwaleke, however, cautioned that the approaching election cycle presents additional risks, as pre-election periods are often characterised by increased fiscal spending, higher liquidity and stronger consumer demand, all of which could fuel inflationary pressures.

He said the committee is likely to respond by reinforcing its commitment to price stability through strong policy guidance while closely monitoring fiscal developments rather than resorting immediately to another rate hike.

“Against this backdrop, my expectation is that the MPC will retain the Monetary Policy Rate at 26.5 per cent, maintain the current asymmetric corridor around the MPR, and leave the Cash Reserve Requirement and other policy parameters unchanged,” he stated.

Similarly, the Chartered Institute of Bankers of Nigeria (CIBN) has projected that the apex bank will maintain its current monetary policy stance.

President and Chairman of the Council of the institute, Dr. Dele Alabi, said current economic indicators support a hold decision, noting that inflation has neither declined sufficiently to justify easing nor accelerated enough to warrant further tightening.

“I expect the MPC to keep the interest rate constant and monitor developments over the next couple of months before considering any adjustment,” Alabi said.

He explained that maintaining the existing policy framework would allow the Central Bank sufficient time to evaluate inflationary trends and broader macroeconomic conditions before making additional policy changes.

Also lending his voice, former member of the Monetary Policy Committee, Prof. Akpan Ekpo, advised the committee to maintain the benchmark rate, citing prevailing global uncertainties.

Ekpo pointed to geopolitical tensions, particularly those involving the United States and Iran, as developments capable of triggering higher crude oil prices and renewed inflationary pressures.

However, he argued that such shocks are likely to be temporary and should not prompt an immediate increase in interest rates.

Instead, he urged policymakers to continue monitoring both domestic and global economic developments while encouraging the Federal Government to boost investment in productive sectors to stimulate growth.

He also recommended that the government adopt policy proposals put forward by the Manufacturers Association of Nigeria (MAN) to strengthen local production and improve economic resilience.

Analysts at Cowry Asset Management Limited also believe recent inflation figures strengthen the argument for policy stability.

According to the investment firm, June’s inflation reading of 15.91 per cent, supported by relative exchange rate stability and moderating energy costs, reinforces the case for the MPC to maintain current rates.

The firm, however, noted that food inflation remains elevated, suggesting that underlying price pressures have not completely eased despite the moderation in headline inflation.

With inflation showing signs of moderation, the naira remaining relatively stable and monetary conditions already highly restrictive, analysts believe the committee is more likely to preserve policy stability than introduce fresh tightening measures.