The unexpected slowdown in inflation has reinforced expectations that the Monetary Policy Committee of the Central Bank of Nigeria could begin easing monetary policy at its next meeting, scheduled for next Monday and Tuesday, according to analysts at FXTM.
Ahead of the release of the inflation data for January, multiple analysts projected that inflation would rise to about 19 per cent, driven by the base-year effect. However, the headline inflation rate deviated from the analysts’ projections to slide to 15.10 per cent, marginally lower than 15.15 per cent in December 2025. The moderation was largely attributed to softer food prices, which helped offset broader price pressures across the economy.
Commenting on the trend, the Senior Market Analyst at FXTM, Lukman Otunuga, described the development as a welcome surprise that strengthens the argument for a rate cut, noting that the disinflation trend provides policymakers with greater flexibility after months of aggressive tightening.
“In a welcome development for Nigeria’s economy, inflation unexpectedly slowed in January, with prices rising 15.1 per cent year-on-year. This represented a slight decline from 15.2 per cent in December and was well below the 19.5 per cent median estimate.
Lower food prices have helped offset inflationary pressures, paving the way for the CBN to cut rates in February after leaving benchmark rates at 27 per cent in November. In addition, the argument for lower rates has also been reinforced by the naira’s eight per cent appreciation against the dollar year-to-date.
“So, the question is not if but how much the CBN will slash interest rates next week.
The MPC had maintained its hawkish stance for most of 2025 and merely cut the rate to 27 per cent in a bid to stabilise prices and the currency.
A rate cut, analysts say, could help ease borrowing costs for businesses and households, potentially supporting economic activity at a time when growth remains fragile.
Still, risks remain. Inflation, while lower, is still elevated relative to long-term targets, and any premature easing could reignite pressure on the currency or reverse gains in price stability.
For now, FXTM argues that the latest inflation print strengthens the case for a measured policy pivot, setting the stage for what could be a closely watched monetary policy decision in the weeks ahead.
Outside the shores of Nigeria, the expert said: “The dollar is rangebound, gold is lower, bitcoin lacks direction, while oil benchmarks await a fundamental spark.” Nevertheless, things could spice up thanks to top-tier data and geopolitical developments.
“Throughout the week, key data from Europe, the United Kingdom, Japan, and Australia may inject fresh life into global FX markets. In the crypto space, Bitcoin is down over 20% year-to-date, with prices currently hovering around the $70,000 level. Prices remain under pressure on the daily charts with $60,000 marked as a liquidation level, according to reports from Bloomberg.
“This week’s main event may be the Fed minutes, US PCE, and the delayed US Q4 GDP report. The December PCE report will offer fresh insights into consumption, while the GDP should provide insight into the health of the largest economy in the world.”
