MPC Splits 6-5 in Decision to Hold Policy Rate at November Meeting

Nume Ekeghe

Members of the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) were sharply divided at their November 2025 meeting over whether the time was right to begin a cautious easing cycle or to hold rates steady in order to consolidate recent macroeconomic gains.

Personal statements posted on the apex bank’s website yesterday, indicated that while 12 members attended the meeting, 11 cast votes, with six favouring a hold and five backing a modest rate cut. The committee ultimately voted by majority to retain the Monetary Policy Rate at 27 per cent.

The split reflected differing assessments of how durable Nigeria’s recent disinflationary trend has become, and if easing too early could undermine progress made in stabilising prices, the exchange rate and external reserves.

Those who voted to hold rates were led by CBN Governor, Olayemi Cardoso, alongside Bala Moh’d Bello, Emem Usoro, Lydia Jafiya, Philip Ikeazor, Muhammad Sani Abdullahi. On the other side were Aku Odinkemelu, Aloysius Uche Ordu, Bandele Amoo, Lamido Abubakar Yuguda and Murtala Sagagi all of whom voted for a 50-basis point cut in the policy rate to 26.5 per cent.

Governor Cardoso argued that maintaining the current stance best supported the disinflationary progress already achieved. Inflation had declined to 16.05 per cent in October, down from 18.02 per cent in September and 8.43 percentage points below the 24.48 per cent recorded in January 2025.

Echoing this caution, Bala Moh’d Bello said it was too early to declare victory over inflation, stressing the need to preserve gains from earlier tightening.

He cited Nigeria’s removal from the FATF grey list, improved sovereign credit ratings, exchange rate stability and rising external reserves as achievements that should not be put at risk.

“The current levels of key policy parameters are suitable and would prevent the disruption of the ongoing transmission of previous policies,” he said, adding that inflation, though declining, remained above the target range.

Emem Usoro also favoured retaining the MPR, noting that inflation expectations were yet to be fully anchored and that the exchange rate remained vulnerable to seasonal and external shocks.

He argued that maintaining a restrictive stance would reinforce anti-inflation signaling while discouraging banks from passively parking liquidity.

“Maintaining the Monetary Policy Rate at 27 per cent supports the disinflation trajectory without jeopardising recent gains,” Usoro said.

Lydia Jafiya similarly voted to keep all parameters unchanged, warning of upside risks to inflation from year-end festivities and pre-election spending.

While acknowledging improvements in macroeconomic conditions, she said policy space remained limited.

“With inflation still elevated at 16.05 per cent, there is need to tread cautiously as risks to the outlook are on the upside,” she said, insisting that a hold decision was appropriate while monitoring emerging risks.

Muhammad Sani Abdullahi also backed a hold, pointing to excess liquidity in the banking system as a potential threat to policy effectiveness. While cautioning against further tightening, he argued that easing was unnecessary at this stage.

“The current stance is appropriately restrictive and no further action is warranted at this time,” he said, adding that inflation, output and exchange rate indicators were gradually responding to earlier tightening.

On the easing side, Aku Odinkemelu argued that Nigeria had entered a window for calibrated policy adjustment. She said the disinflation trend was now “entrenched and broad based”, with headline inflation declining for seven consecutive months to 16.05 per cent in October 2025.

According to her, improved food supply, a stable exchange rate and stronger external reserves provided room for a cautious rate cut.

“A 50bps reduction in the MPR at this juncture is a prudent, forward-looking adjustment that acknowledges the hard-won gains in price stability and external resilience,” she said, adding that tight reserve requirements should remain in place.

Aloysius Uche Ordu also supported a 50-basis point cut, citing easing global financial conditions and improving domestic fundamentals.

He pointed to eight consecutive months of inflation moderation, a strengthening naira and rising foreign reserves as evidence of a shift in the macroeconomic narrative.

“This is not a time for rapid loosening of policy,” Ordu cautioned, stressing that the fight against inflation “is a marathon, not a sprint”, and that policy credibility must be preserved even while supporting growth.

Bandele Amoo aligned with the easing camp, arguing that the steady disinflation path and resilient growth across agriculture, services and manufacturing justified a modest adjustment.

He raised concerns about fiscal-driven liquidity ahead of the 2026 budget cycle and the 2027 elections.

“A small ease in MPR, strongly reinforced by adjusted rate corridors, will strengthen critical sectors and help moderate the risk of high inflation expectations,” he said.

Lamido Abubakar Yuguda also voted for a 50-basis point cut, describing the recent fall in inflation as “substantial and broad based”.

He noted that growth was being driven largely by non-oil sectors and that global monetary conditions were becoming more accommodative.

“The modest rate reduction reflects a nuanced assessment of Nigeria’s current economic position,” Yuguda said, while warning that fiscal spending and exchange rate pressures still required close monitoring.