MPC to decide on rate cut amid disinflation debate
Nigeria's MPC faces a finely balanced decision at its upcoming meeting on 22nd and 23rd February, with analysts divided between a potential policy rate cut and a hold decision amid improving macroeconomic indicators. While headline inflation has declined for eleven consecutive months to 15.1% in January 2026, easing price pressures alone may not be sufficient to trigger an immediate policy shift. However, strengthening external buffers, exchange rate appreciation, and stable energy prices are increasingly reinforcing arguments for cautious normalization. What experts are saying: Head of Research at Afrinvest West Africa, Asimiyu Damilare, believes recent macroeconomic developments have strengthened the case for a potential rate cut, citing sustained disinflation, rising FX reserves to $47.8 billion, and naira appreciation to N1,355/$. He notes the close split in November's MPC vote (5 for cut vs 6 hold) signals growing receptivity to normalization. Conversely, Portfolio Manager at CFG Africa, Olumayowa Bolujoko, cautions that elevated system liquidity (10.2% MoM increase in currency outside banks) and potential near-term inflation pressures could tilt the MPC toward maintaining rates at 27.0% despite disinflation progress. Factors shaping the decision include the durability of disinflation, external reserves, exchange rate stability, and the need to maintain yield attractiveness for Foreign Portfolio Investment inflows. The MPC may opt for a hold while signaling a dovish bias, with a formal pivot contingent on sustained disinflation and external stability.