The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) retained the Monetary Policy Rate (MPR) at 27.0%.
This decision was underpinned by the need to consolidate the gains from previous monetary policy tightening to ensure low and stable consumer prices. In contrast, the MPC adjusted the asymmetric corridor around the MPR downwards to +50bps/-450bps (Previous: +250bps/-250bps).
However, the Cash Reserve Requirement (CRR) for Deposit Money Banks, Merchant Banks and non-TSA public sector deposits was maintained at 45.0%, 16.0% and 75.0%, respectively. The liquidity ratio was also left unchanged at 30.0%.
On Domestic Growth: The Committee observed that the economy remains on an expansionary path, supported by resilient private sector activity reflected in the CBN’s Purchasing Managers’ Index (PMI). The Composite PMI climbed to 56.40 in November from 52.30 in June, comfortably above the 50-point threshold that signals expansion and indicates a more positive growth outlook in Q3-25 and Q4-25.
On Inflation: The MPC highlighted the downtrend in inflation (October 2025: 16.05% y/y) driven primarily by the lagged effect of monetary policy tightening, base effects, naira appreciation, improved agricultural output, and steady fuel prices.
On the External Sector: The Committee noted sustained improvement in Nigeria’s external sector, which, together with sustained reforms, has supported upgrades in Nigeria’s sovereign credit rating by major credit rating agencies. The Committee also welcomed Nigeria’s removal from the Financial Action Task Force (FATF) grey list, which is expected to boost investor confidence. According to the CBN, FX reserves rose by 9.19% to USD46.70 billion as of November 14, from USD42.77 billion in September 2025, and are sufficient to cover approximately 10.3 months of imports.
On Global Developments: The Committee noted that the global economic outlook is expected to improve in the near to medium term, driven by improved trade negotiations, monetary policy easing in advanced economies and easing geopolitical tensions. Nonetheless, downside risk remains, including increased trade protectionism, geo-economic fragmentation and possible resurgence of trade tensions between the US and its major trading partners.
Cordros’ View
Contrary to our expectations of a 100bps reduction, the MPC retained the MPR at 27.0%, despite the sharper disinflationary outturn in recent months and the appreciation of the naira.
According to the MPC, inflation remains elevated at double-digit levels, underscoring the need to keep interest rates high to strengthen the disinflationary trend. However, the Committee signalled an easing bias by adjusting the asymmetric corridor to +50/-450bps (Previous: +250bps/-250bps) around the MPR. This indicates a reduction in interest rates for the Standing Lending Facility (SLF) and the Standing Deposit Facility (SDF) to 27.5% (Previous: 29.5%) and 22.5% (Previous: 24.5%), respectively. The adjustment is expected to ease monetary conditions and strengthen banks’ private sector credit expansion.
Going into 2026, we expect inflation to continue easing as key drivers unwind, including sustained naira stability, better harvest outcomes and relatively stable petroleum prices. Nonetheless, in line with the MPC’s price stability goal and given that inflation is likely to remain in double digits in 2026, we believe the pace of interest rate cuts will likely remain measured.
Market Impact
Fixed Income: With the MPC maintaining the MPR, the fixed income market enters the rest of the year with a stable policy anchor that should support a continued, albeit marginal, yield decline. Precisely, we expect a measured decline across the curve, driven largely by improved liquidity conditions and a slower inflation trajectory.
Also, the MPC’s adjustment of the asymmetric corridor to +50bps and −450bps from +250bps and −250bps is likely to support improved demand from the banks. Precisely, the lower SDF bound is likely to reduce the incentive for banks to sterilise liquidity at the window, although elevated usage through the year suggests this effect may be gradual. Nonetheless, the lower bound could result in improved demand for treasury issuances, supporting our view of a downward trend in yields.
Equities: We expect a measured market reaction to today’s MPC outcome. Sentiment has softened since the September meeting, with the NGX All-Share Index rising only 2.0% over the period, bringing YTD performance to 39.7% as of November 25. The slowdown reflects a combination of factors, lingering uncertainty around CGT implementation, recent US–Nigeria diplomatic tensions, and profit-taking in key bellwethers.
These pressures are likely to persist through year-end, and the MPC’s decision to hold rates is unlikely to re-energise momentum. Additionally, still elevated fixed income yields pose an additional drag, as investors continue to find short-duration instruments compelling at prevailing levels. That said, we do not rule out a mild year-end rally, driven by bargain hunting at attractive entry points, portfolio rebalancing by institutional investors, and sentiment support ahead of full year earnings positioning.
Cordros
