Nigeria’s Monetary Policy Committee (MPC) is heading into its latest interest-rate decision with inflation easing for three consecutive months and food inflation recording its first decline in about six months.
The improvement has increased expectations that the committee could reduce its benchmark interest rate further. However, concerns about whether the slowdown in inflation can be sustained, alongside increased government spending, could make policymakers cautious.
The Monetary Policy Rate (MPR) currently stands at 26.5 percent following two 50-basis-point reductions between September 2025 and February 2026.
The recent moderation in inflation gives the MPC more room to consider another rate cut. However, policymakers remain divided over how quickly monetary policy should be eased.
A review of MPC meetings between July 2023 and July 2026 shows that the committee’s debate has gradually shifted from the size of rate increases during the 2024 tightening cycle to the pace and sustainability of monetary easing.
“The dividing line is no longer hawk versus dove but how much of the disinflation is durable, and how far pre-2027 election spending will undo it,” the review said.
The differences within the committee were evident at its November 2025 meeting. Five members supported a 50-basis-point reduction, while seven, including CBN Governor Olayemi Cardoso, voted to retain the MPR at 27 percent.
Cardoso has maintained that tight monetary conditions are necessary to consolidate progress made in bringing inflation under control.
“I am, therefore, firmly convinced that holding policy rates at current levels best supports our disinflationary progress,” Cardoso said at the November 2025 meeting.
“In my view, holding is a clear signal of reinforcing stability and acknowledgement that the current policy stance is having the desired effect.”
However, some members have pushed for faster monetary easing, particularly because of the effect of high interest rates on borrowing and investment.
Murtala Sagagi called for a 100-basis-point rate cut in February 2026, which was twice the reduction eventually approved.
His position has focused on whether reductions in the policy rate are translating into lower borrowing costs for businesses and households.
“Credit transmission: The CBN should monitor the pass-through of rate reductions to lending rates closely … The CBN should maintain dialogue with the fiscal authorities to ensure a more responsible spending,” Sagagi said at the February 2026 meeting.
Sagagi had also supported smaller rate increases during the 2024 tightening cycle, backing a 100-basis-point increase rather than the 400-basis-point hike adopted in February that year.
Other MPC members have argued that the committee needs stronger evidence that inflation is falling on a sustained basis before further easing.
At the July 2026 meeting, Mustapha Akinkunmi said the recent improvement in inflation had not yet provided sufficient evidence to justify another reduction.
“In my assessment, recent improvements, while encouraging, do not yet provide sufficient assurance that inflationary pressures have moderated on a sufficiently broad-based and durable basis to justify further policy easing,” he said.
The division within the committee is also reflected in its voting record. Thirty of the 163 individual votes recorded across 14 meetings under the current committee differed from the final decisions adopted by the MPC.
Ten of those disagreements involved the direction of monetary policy, while the remaining 20 concerned the size of the adjustment.
Between February and November 2024, the committee raised the MPR by a cumulative 875 basis points, moving it from 18.75 percent to 27.5 percent. The easing cycle began in September 2025, with the rate subsequently reduced by 100 basis points to its current 26.5 percent.
The committee’s discussions have also expanded beyond the benchmark interest rate, with policymakers increasingly focusing on liquidity management, reserve requirements and how effectively monetary policy is transmitted to the wider economy.
In 2024, concerns centred largely on exchange-rate pass-through and negative real interest rates. By 2025, attention had shifted towards liquidity management and monetary-policy transmission, while fiscal injections, pre-election spending and the sustainability of disinflation have become more prominent concerns in 2026.
Several MPC members have warned that increased government spending and fiscal injections could weaken progress in reducing inflation.
Bandele Amoo identified “the persistence of excess liquidity from fiscal injections” as his primary concern, saying it could undermine disinflation gains and exchange-rate stability.
The Central Bank of Nigeria has responded with measures aimed at managing liquidity, including a 75 percent cash reserve requirement on non-Treasury Single Account public-sector deposits and adjustments to its monetary policy corridor.
The latest inflation figures therefore present the MPC with a key policy question: whether the recent slowdown is strong and lasting enough to support another rate reduction or whether policymakers should maintain the current stance until there is greater evidence that inflationary pressures are firmly under control.
