As the Central Bank of Nigeria’s Monetary Policy Committee (MPC) gears up for its 301st meeting on July 21–22 in Abuja, expectations are rising that the committee may consider easing its hawkish monetary stance, following positive inflation data and growing exchange rate stability.

According to the National Bureau of Statistics, headline inflation eased for the second consecutive month, moderating to 22.22% in June from 22.97% in May. This marks significant progress from the 34.19% recorded a year earlier. The trend follows the rebasing of the Consumer Price Index, which contributed to the recalibrated inflation readings. Alongside this, the naira has appreciated 7.27% since January, driven by sustained CBN interventions and declining forex demand.

These gains have sparked debate among analysts and stakeholders. While Afrinvest and Cordros Securities believe the MPC may hold rates steady due to lingering external risks, food inflation, and a delayed GDP release, others such as Bismarck Rewane of Financial Derivatives Company are advocating a 25-basis-point rate cut to 25%. Rewane argues that the time is right to reduce borrowing costs and stimulate the productive sector, supported by a favorable IMF outlook projecting inflation to drop to 18% by 2026.

Despite this optimism, caution remains. At its last meeting in May, the MPC held the Monetary Policy Rate (MPR) at 27.5%, emphasizing the need to guard against premature easing that could weaken the naira. The committee cited strong macroeconomic indicators such as narrowing FX gaps, lower PMS prices, and improving oil production—currently at 1.74 million barrels per day—as reasons for cautious optimism.

CBN Governor Olayemi Cardoso has signaled a focus on sustaining gains in price and forex stability, affirming the bank’s commitment to orthodox monetary policy. “Inflation has been too high for too long. Our goal is to bring it to single digits in the medium to long term,” Cardoso said, while emphasizing collaboration with the fiscal authorities to drive economic growth.

As the MPC convenes, it must weigh the benefits of stimulating growth against the risks of inflation resurgence. With interest rates and reserve requirements already at historic highs, analysts say Nigeria may be approaching the limits of monetary tightening, and a shift toward gradual easing may now be both prudent and necessary.