CBN signals no rate cut in sight ahead of MPC meeting

The Central Bank of Nigeria (CBN) has signalled that there might be no rush for an easing cycle even though inflation slowed in June, marking the first slowdown since the Middle East tensions began in February.

Olayemi Cardoso, the CBN governor said on Thursday, that authorities had projected that a rate cut was imminent as inflation began gradual cooling but the longer-than-necessary US-Iran war dimmed that outlook.

“There were 11 months of continuous disinflation,” Cardoso said at the BusinessDay’s CEO Forum, adding that the trend had strengthened expectations that “over a period of time, ​we would expect interest rates to begin to moderate.”

Investors have been searching for signs that the Abuja-based bank is nearing an easing cycle after inflation cooled for 11 straight months to February 2026 before beginning to trend upward afterwards.

But Cardoso’s remarks meant policymakers’ are cautious of ​external shocks and its effects on domestic price risks, suggesting rates may remain ⁠higher for longer.

“If not for the fact ‌that ⁠we had this, we had projected that going into next year inflation would have been down to very moderate levels.”

Cardoso defended the bank’s decision to hold rates at its last meeting, despite market expectations ​of an impending policy ​pivot.

“We didn’t ⁠cut, and believe me, we saw things that most other people didn’t see.”

He said the Monetary Policy ​Committee (MPC), which is expected to meet next week July 20th and 21st, would remain guided strictly by data rather ​than market ⁠sentiment, and credited the early implementation of economic reforms with helping Nigeria withstand recent global shocks.

“One of the reasons for that is the fact ⁠that ​we had undertaken the reforms a lot ​earlier,” Cardoso said. “We had resilience and we were able to withstand the shocks.”

The 12-member MPC tightened key rates for most of 2025 in an attempt to tame stubbornly high inflation and ease prices.

That might be the approach this year should the Iranian war persist for longer, leaving authorities to decide whether to chase growth by slashing rates or reduce prices by remaining hawkish.