At its November 2025 meeting, the Monetary Policy Committee (MPC) of the Central Bank of Nigeria faced a question that has quietly defined monetary debates over the past six months: has Nigeria reached the point where easing can begin without jeopardising credibility?
Five of the 12 MPC members—representing 41.7% of the committee—believed the answer was yes. They voted for a 50 basis point cut in the Monetary Policy Rate (MPR), proposing a reduction from 27.0% to 26.5%, alongside a recalibration of the asymmetric corridor.
The remaining seven members disagreed. By majority decision, the MPC held the policy rate at 27.0%, signalling continued caution despite improving macroeconomic indicators.
The voting split, published in members’ statements released this week, reveals a clear divergence in policy sequencing, rather than a disagreement over the direction of the economy.
The Minority View: Disinflation Is No Longer Fragile
Those who voted for easing anchored their position on the view that Nigeria’s disinflation process has moved from tentative to durable.
Their argument rested on three pillars:
• Sustained inflation moderation, with headline inflation easing for seven consecutive months and falling to 16.05% by October 2025.
• Improving external buffers, including stronger foreign reserve levels, steadier capital inflows, and reduced exchange-rate volatility.
• Resilient growth, particularly in the non-oil economy, suggesting that earlier monetary tightening had not derailed output.
From this perspective, a modest and highly calibrated rate cut would not represent a policy reversal, but rather a technical adjustment to prevent monetary conditions from becoming unnecessarily restrictive as inflation trends lower.
Crucially, the minority did not argue for broad loosening. They supported retaining tight liquidity conditions through high cash reserve requirements and a restrictive corridor, seeing the rate cut as a way to improve credit transmission—especially to agriculture and manufacturing—without reopening inflationary risks.
In essence, the minority believed the tightening cycle had done its job, and that policy should begin adjusting before real-sector momentum weakens.
The Majority View: Credibility First, Patience Second
The majority of MPC members took a more conservative position—not because they disputed the progress on inflation, but because they judged the risks of easing too early to be asymmetric.
Their rationale centred on four concerns:
1. Inflation remains in double digits, well above comfort thresholds, and expectations are not yet fully anchored.
2. Lag effects of prior tightening are still working through the economy, meaning premature easing could blunt their impact.
3. Fiscal-driven liquidity risks, including seasonal spending and election-related pressures, could reverse recent gains.
4. Exchange-rate stability, though improved, remains vulnerable to shocks if policy signals are misread.
For the majority, holding the MPR steady was less about resisting growth support and more about protecting policy credibility. They viewed an early pivot as risking the perception that the Central Bank might relax discipline before inflation is firmly contained.
In short, the majority judged that waiting costs less than moving too soon.
Where Both Sides Agreed
Despite the disagreement over the headline rate, there was notable alignment on broader policy architecture.
All members supported:
• Maintaining a Cash Reserve Ratio of 45% for deposit money banks and 30% liquidity ratio.
• Retaining a tight asymmetric corridor, designed to discourage banks from passively parking funds at the central bank and instead promote interbank activity.
This consensus underscores that the debate is not about tightening versus loosening, but about timing and calibration.
What the Vote Really Signals
The November decision reveals an MPC that is no longer debating direction, but debating pace.
A sizeable minority is signalling readiness for a cautious pivot if disinflation persists and external stability holds. The majority, however, is insisting on additional confirmation before making that move.
For now, the Central Bank has chosen restraint over responsiveness. But with nearly half the committee already inclined toward easing, the balance of opinion could shift quickly if inflation continues to fall toward the mid-teens.
The next MPC meeting, scheduled for February 23–24, 2026, may therefore be less about whether rates will fall—and more about how soon the committee is willing to acknowledge that the tightening phase is decisively over.
If December’s inflation print of 15.15% proves durable, the November vote may come to be seen not as resistance to easing, but as the last holding action before a gradual pivot.
