The Central Bank of Nigeria (CBN) is facing growing pressure to ease monetary policy rates after new data confirmed inflation slowed for the fifth consecutive month, strengthening calls for a shift from aggressive tightening to pro-growth measures.

According to the National Bureau of Statistics (NBS), headline inflation dropped to 20.12 per cent in August from 21.88 per cent in July, while food inflation moderated to 21.87 per cent from 22.74 per cent.

Core inflation also eased to 20.33 per cent from 21.33 per cent, driven by stable exchange rates, better harvests, and improving foreign reserves.

Economic experts say the trend signals a decisive turn toward disinflation, though many households are yet to feel the impact, as food prices and living costs remain high.

The Independent Media and Policy Initiative (IMPI) projects inflation could drop to 17 per cent by December, close to the government’s 15% target.

It urged the CBN’s Monetary Policy Committee (MPC) to cut interest rates by up to 200 basis points before year-end and reduce the Cash Reserve Ratio (CRR) from 50 per cent to 35 per cent to inject liquidity into the economy.

Dr. Muda Yusuf, Chief Executive of the Centre for the Promotion of Private Enterprise (CPPE), acknowledged that reforms under CBN Governor Yemi Cardoso have restored stability, transparency, and credibility to the financial system.

However, he warned that sustaining growth now requires a more balanced approach.

“The next phase of reform must support growth while preserving macroeconomic stability,” Yusuf said.

He recommended gradual rate cuts, targeted SME financing, credit guarantee schemes, and deeper domestic bond markets to finance infrastructure.

Yusuf said: “200 basis points is on the high side. I mean, there are still pockets of instability or potential instability both in the global and domestic economy. We have all these geopolitical issues. We have the tariff issues. These are potential sources of instability. So, easing of monetary rates or easing of policy rates can only be gradual.

At this time, we can be talking of maybe 25 basis points or maximum 50 basis points reduction in rates, not something as high as 200 basis points. That would be my own position.

“But, of course, we need to also strengthen coordination between fiscal and monetary to ensure that the fiscal operations of government does not endanger or create a risk for current macroeconomic stability or a risk to the deceleration trend that we have seen in the inflation numbers.

“25 basis points or 50 basis points, I think, should be okay for now because we see high levels of uncertainty that we need to carefully manage going forward.”

Similarly, Dr. Emmanuel Akande, CEO and a Senior Director at CAPE Economic Research and Consulting said: “A 200-basis-point cut in one meeting would be excessive – risking an overly dovish signal, exchange-rate and yield-curve volatility, and a loosening of inflation expectations given policy-transmission lags.

“A calibrated path—50–75 bps now, followed by a further 50 bps at the next meeting contingent on continued disinflation—supports growth while preserving monetary-policy credibility and allowing the MPC to assess liquidity conditions, FX pass-through, and inflation momentum.

“As with bringing a moving car to a stop, you brake progressively rather than slamming the brakes to avoid destabilizing shocks for passengers; monetary easing should likewise be gradual to prevent unintended market dislocations.”

Also, Dr. Chijioke Ekechukwu, a renowned economist said the rates would ease, but not as high as 200 boys.

“I am certain that the MPR and other rates will decelerate, but not up to 200 basis points.”

The inflation rate is dropping, and so the apex bank won’t have any other reason to retain the MPR at 27.5 per cent. The economy needs to be stimulated by the injection of funds through bank loans. A reduction of MPR will ultimately lead to the reduction of interest rates. This will increase funds flow and reduce default on loans.”

Other analysts also pointed to global shifts, noting that inflation worldwide has fallen to 3.5 per cent in 2025 from 9.4 per cent in 2022, prompting central banks to ease policy.

Comercio Partners highlighted Nigeria’s CPI rebasing and increased refining capacity from the Dangote Refinery as potential buffers against exchange rate volatility in energy prices.

Still, economists caution that policy easing must be carefully managed to avoid reversing progress.

“Empirically speaking, the Nigerian economy is now in a disinflationary dispensation,” IMPI said, but warned the CBN must calibrate easing to prevent reigniting inflationary pressures.

Despite macro-level improvements, ordinary Nigerians remain under strain as food and household goods stay expensive, with real incomes lagging behind falling inflation numbers.

With foreign reserves rising to $41.7 billion and portfolio inflows boosting the naira, all eyes are now on the MPC’s upcoming meetings for signals of a policy shift.

A gradual easing, if carefully executed, could unlock credit, spur investment, and accelerate recovery, economists say. (Nigerian Tribune)