Nigeria’s Monetary Policy Committee is expected to keep rates unchanged at its May 19-20 meeting, as a fresh inflation uptick and renewed global oil-market risks argue for caution even as domestic growth shows signs of slowing.
The committee is likely to leave the Monetary Policy Rate at 26.50%, maintain the asymmetric corridor at +50/-450 basis points and hold the liquidity ratio at 30.00%, while keeping cash reserve requirements unchanged for banks and public-sector deposits., according to Meristem analysts.
Mixed Macro Picture
The case for a pause has strengthened since the last meeting. Global uncertainty has increased as US-Iran tensions lifted oil prices and disrupted trade routes, while major central banks have already shifted to a wait-and-see stance rather than cutting further.
At home, Nigeria’s economy has softened. The CBN Composite PMI fell below the 50-point expansion threshold in April to 49.40 from 53.20 in March, pointing to weaker demand and higher energy, transport and production costs.
Inflation Pressures Return
Headline inflation rose for a second straight month in April to 15.69% year on year, with food prices doing most of the damage. Although some core and month-on-month measures eased, the trend still leaves policymakers with limited room to ease prematurely.
Oil output improved modestly in April to 1.66 million barrels a day, but production remains below quota and vulnerable to maintenance problems, vandalism and pipeline disruptions. That keeps pressure on fiscal and external buffers at a time when Brent has traded near its highest levels since 2022.
Policy Stance
A hold would reflect a classic central-bank balancing act: contain near-term inflation risks without worsening the slowdown in private-sector activity. For now, the data suggest the committee is more likely to preserve its current tightening stance than risk an early reversal.
The broader message is that Nigeria’s policy makers are still prioritizing disinflation credibility over growth support, even as the cost of that stance becomes more visible in the real economy.
Follow the MoneyCentral Nigeria channel on WhatsApp: Click here!
