According to Lukman Otunuga, head of Market Research at FXTM, oil benchmarks are on track for their strongest monthly performance since 1990, driven by escalating concerns over supply disruptions.

The continued closure of the Strait of Hormuz amid the ongoing Iran conflict has pushed crude prices above the critical $100 mark, a key psychological threshold for global markets.

For Nigeria, a net oil exporter, the surge in oil prices presents a potential upside. Higher crude revenues could support foreign exchange inflows and strengthen the naira.

However, this optimism is tempered by broader global risk aversion կապված the geopolitical crisis, which may limit gains.

Global markets have been rattled by conflicting developments surrounding the Iran conflict. Tensions escalated after Iran accused the United States of preparing for a possible ground offensive, even as President Donald Trump signaled openness to negotiations.

While reports of possible de-escalation briefly lifted investor sentiment, inconsistent messaging and continued disruptions to oil supply routes have kept markets volatile.

Beyond geopolitics, investor focus is shifting to key economic data from the United States, particularly the March Non-Farm Payrolls (NFP) report.

The data is expected to provide insight into the health of the US labour market, with forecasts pointing to 65,000 new jobs, recovering from a contraction of 92,000 in the previous month.

The outcome could influence expectations around Federal Reserve policy at a time when rising energy costs are complicating the inflation outlook.

Meanwhile, gold prices have declined sharply, down nearly 14% this month, despite the risk-off environment. A stronger US dollar and reduced expectations of interest rate cuts have weighed on the precious metal, underscoring shifting investor preferences.

Currency markets are also in focus, with the USD/JPY pair crossing the 160 level for the first time since July 2024.

This raises the possibility of intervention by Japanese authorities, as seen in previous episodes.

Further volatility may emerge as investors weigh the combined impact of geopolitical tensions and energy market fluctuations, particularly given Japan’s heavy reliance on Middle Eastern oil imports.

Overall, while higher oil prices provide a supportive backdrop for Nigeria’s economy, persistent global uncertainty and mixed market signals suggest a volatile week ahead for investors and policymakers alike.

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The decision, reached during the first Monetary Policy Committee (MPC) meeting of 2026, marks a departure from the aggressive tightening cycle of the past two years.

The move was necessitated by a favourable convergence of fundamental economic forces, including easing inflationary pressures and a significantly bolstered external buffer.

The Numbers: A Measured Dovish Stance

While some market spectators had priced in a more aggressive 100bps cut, the 50bps reduction is seen as a calibrated strategy, mirroring the dovish pivots seen in other major African economies.

Key Drivers of the Rate Cut:

• Cooling Inflation: Persistent moderation in headline inflation provided the necessary room for the apex bank to ease.
• Stronger Naira: The local currency has maintained an impressive 6% year-to-date (YTD)
• Reserves Buffer: Foreign Exchange (FX) reserves recently hit a 13-year high, providing the CBN with enough ammunition to defend the Naira while lowering borrowing costs.

Analyst View: High Real Rates and FPI Attraction

According to Lukman Otunuga, Senior Market Analyst at FXTM, the rate cut is likely to have a stabilizing and potentially positive impact on the Naira.

He noted that even with the reduction, Nigeria’s interest rate remains one of the highest on the continent.

“Even with the 50-bp rate cut, real rates remain high when accounting for inflation. Nigeria’s interest rate is still one of the highest in Africa, which may attract Foreign Portfolio Investors (FPIs), lending the Naira further support,” Otunuga stated.

Mathew Anthony, also a Market Analyst at FXTM, added that the move would likely boost investor confidence ahead of the Q4 2025 GDP report scheduled for release later this month.

He emphasized that with favourable fundamentals at play, it was always a question of “how much” rather than “if” the rates would be cut.

The CBN is performing a delicate balancing act. By cutting the MPR by 50bps, the apex bank is signaling a pro-growth stance to the real sector without completely scaring off the carry-trade investors who have helped shore up the Naira.

What this means for you:

Borrowing Costs: Expect a gradual, albeit slow, reduction in the cost of commercial bank loans as the 50bps cut trickles down to prime lending rates.

Stock Market: Lower interest rates typically make equities more attractive. Expect a positive reaction in the NGX as investors rotate out of fixed income into stocks.

FX Stability: As long as Nigeria maintains one of the highest real interest rates in Africa, FPI inflows are expected to remain steady, supporting the Naira’s 6% YTD growth momentum.

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The optimistic outlook is fueled by a surprise moderation in headline inflation, which cooled to 15.1% in January 2026, down from 15.2% in December, and the Naira’s sustained 8% appreciation against the dollar since the start of the year.

The Case for Easing: Inflation vs. Exchange Rate

Nigeria’s disinflation trend has gained significant momentum, defying earlier market projections of 19.5%.

Analysts at Cordros Research and FXTM suggest that the worst of the inflation cycle is now in the rearview mirror, providing the apex bank with the necessary room to recalibrate its aggressive tightening cycle.

Key Economic Indicators (Jan 2026):

• Headline Inflation: 15.1% (Year-on-Year)
• Naira Performance: ~8% appreciation YTD
• Lending Rates: Average maximum lending rate dropped to 29.32% in Dec 2025.

Analyst Perspectives: A Cautious Calibrated Cut

While the case for easing is strong, experts warn that the CBN will likely avoid a “shock” reduction to prevent reigniting price pressures.

Ayokunle Olubunmi, head of Financial Institutions Ratings at Agusto & Co., expects a maximum cut of 100 basis points.

“Even if there are adjustments to the Cash Reserve Ratio (CRR), it will likely be minor,” he noted, citing the need to balance growth support with liquidity control as government capital spending ramps up.

Lukman Otunuga, Senior Market Analyst at FXTM, highlighted that the unexpected dip in food prices has been a primary driver of the disinflation trend, reinforcing the argument for a rate reduction to stimulate the real sector.

The CBN appears to have reached an inflection point. After nearly two years of aggressive interest rate hikes that pushed borrowing costs to record highs, the tight money era is cooling.

A 100bps cut would signal to the markets that the CBN is gaining confidence in its currency stability measures and its new CPI series.

However, the real test will be the transmission mechanism. While the MPC may cut the MPR, businesses on the ground will be watching to see if commercial banks follow suit by lowering the 29.3% average lending rate, or if they will maintain high margins to protect their own liquidity buffers amidst the ongoing 2026 recapitalization exercise.

[Part of publication sourced from ThisDay]

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According to market analysis by Lukman Otunuga, senior market Analyst at FXTM, headline inflation slowed to 15.1% year-on-year in January, down from 15.2% in December and significantly below the 19.5% medium estimate.

The moderation was largely driven by lower food prices, helping offset broader inflationary pressures across the economy.

CBN Rate Cut Expectations Rise

The latest inflation data has intensified speculation that the CBN may cut its benchmark interest rate after holding it steady at 27% in November.

Analysts note that easing price pressures, combined with the naira’s relative stability, provide room for policy recalibration. The naira has appreciated by approximately 8% against the US dollar year-to-date, reinforcing arguments for a shift toward monetary easing.

Market watchers now believe the debate is no longer whether the CBN will cut rates, but by how much.

A rate cut could provide relief to businesses and households, while also reshaping yield dynamics in Nigeria’s fixed-income market.

Oil in Focus as US-Iran Talks Resume

Beyond Nigeria, global markets are bracing for a potentially volatile week driven by geopolitics and key economic data releases.

On Tuesday, US-Iran talks in Geneva could influence the short-term trajectory of oil prices. Crude benchmarks have gained more than 10% year-to-date, supported by geopolitical tensions and supply risks.

A breakthrough in negotiations may ease supply concerns, while stalled talks could further tighten oil markets.

US PCE, Fed Minutes and GDP Data to Drive Markets

The main global focus this week will be US macroeconomic data, including:

• Federal Reserve meeting minutes
• December Personal Consumption Expenditures (PCE) report
• Delayed US Q4 GDP figures

The PCE report, the Federal Reserve’s preferred inflation gauge, will offer fresh insight into consumer spending trends, while GDP data will provide clarity on the health of the world’s largest economy.

Last week’s softer-than-expected US CPI data strengthened expectations of rate cuts, with traders now pricing a roughly 50% probability of three Federal Reserve rate cuts in 2026.

Should upcoming data reinforce dovish expectations, the dollar may weaken further, potentially supporting gold and US equities.

Bitcoin Under Pressure, $60,000 Level in Sight

In the cryptocurrency market, Bitcoin remains under pressure, down more than 20% year-to-date, with prices hovering near the $70,000 level.

Daily technical charts indicate that $60,000 could serve as a potential liquidation zone, according to Bloomberg reports.

Market direction in crypto is likely to be influenced by broader risk sentiment and US macro data.

Gold Tests $5,000 Psychological Level

Gold ended last week above the $5,000 psychological level but started the new week cautiously.

With Chinese markets closed, liquidity may remain thin, leaving gold vulnerable to geopolitical headlines and US data surprises.

If $5,000 holds as support, bullion could rebound toward $5,100. However, a sustained break below this level may trigger declines toward $4,880 and $4,850.

What this Means for Nigeria

For Nigeria, the combination of easing domestic inflation and a potentially softer US dollar environment may offer macroeconomic breathing space.

However, global volatility, oil price movements, and US monetary policy shifts will continue to shape capital flows, exchange rate stability, and investor sentiment in the week ahead.

The post Otunuga: Nigeria’s Inflation Cools to 15.1%, Now CBN Rate Cut in Focus appeared first on Tech | Business | Economy.

CBN Expected to Hold Rates amid Stubborn Inflation

Nigeria’s central bank is widely expected to maintain its benchmark interest rate when it meets on Tuesday.

Although inflation has declined for three consecutive months, easing to 22.2% year-on-year in June, it remains uncomfortably high.

“The Central Bank of Nigeria (CBN) may delay any potential rate cut until the second half of the year, contingent on a sustained decline in inflationary pressures”, says Lukman Otunuga, senior market analyst, FXTM.

Stock Market Rally Continues

The Nigerian Exchange (NGX) All Share Index has gained nearly 10% month-to-date, pushing total gains for 2025 to almost 30%.

Continuing, Otunuga wrote: “Looking at the NGX All Share Index, it has gained almost 10% month-to-date – pushing 2025 gains to nearly 30%.

“This means the NGX is currently outperforming the S&P500 and Nasdaq100 who have gained roughly 7% and 11% this year respectively. The Naira spot has held its ground against the USD this year after depreciating almost 70% in 2024”.

Global Focus: Big Tech Earnings and ECB Decision

Outside Nigeria, the global earnings season intensifies, with market attention shifting to U.S. tech giants this week.

Alphabet and Tesla are set to report second-quarter results on Wednesday. Alphabet shares surged 14% in Q2 on the back of strong demand for AI products and continued cloud growth.

However, with the stock still negative year-to-date, bullish momentum may hinge on strong earnings. Tesla, down nearly 20% in 2025, risks deeper losses if results disappoint.

On the macro front, key data releases from Europe, the UK, Japan, and the U.S. will shape market sentiment.

But the spotlight will fall on the European Central Bank’s (ECB) policy decision on Thursday. While no rate changes are expected, any forward guidance could trigger fresh volatility in currency and bond markets.

Currently, traders are assigning less than a 50% probability of an ECB rate cut by September.

Dollar Weakens as Tariff Risks Loom

In currency markets, the U.S. dollar has weakened across the board, with the Dollar Index (DXY) sliding toward 97.70.

This decline reflects growing pressure from former President Donald Trump on the Federal Reserve to cut rates, alongside investor caution ahead of the looming August 1st tariff deadline.

Nigeria Braces for U.S. Tariff Impact

Adding to Nigeria’s challenges, the country faces a 14% reciprocal tariff on goods exported to the U.S., effective August 1st.

The potential impact on trade flows and export revenues could raise fresh concerns for policymakers and exporters alike.

The post Nigeria Week Ahead: CBN Holds Rates as Global Markets Watch ECB, Dollar Declines appeared first on Tech | Business | Economy.

Still, concerns over the health of the world’s largest economy linger with investors on high alert ahead of another busy week.

With the US elections just months away, this negative development adds another layer of uncertainty.

Much focus will be on the US CPI print, retail sales, and consumer confidence which are likely to shape expectations around how aggressively the Fed cuts rates.

Regarding the fourth largest economy in Africa, the man theme will be the latest CPI print. One of the key themes in Nigeria in 2024 has been runaway inflation which jumped to 34.2% in June – it’s highest level since 1996.

However, the incoming CPI print is expected to show prices slowing in July, cooling to 33.2% compared to 34.2% in the previous month.

Given the CBN’s aggressive approach towards raising rates, signs of cooling price pressures will be a breath of fresh air for consumers.

It is worth nothing that the Central Bank of Nigeria has raised rates by a whooping 800 basis points in 2024.

Looking beyond inflation, the next key event will be GDP published later this month. After expanding 3% in Q1, it will be interesting to see whether growth can be maintained in Q2.

In the FX space, the Naira continues to gain against the dollar on the official exchange with the spot rate at N1589 as of Monday.

Regarding oil, it has extended its first weekly gain since early July thanks to geopolitical tensions in the Middle East.

Rising oil prices may have a positive knock-on effect for the economy, especially when factoring how a major chunk of revenues is acquired from oil sales. However, this could be cancelled out by the rising cost of fuel imports which is costing Nigeria $600 million per month.

Still, this is set to be another big week for the global commodity due to the monthly outlook from the International Energy Agency.

Talking technicals, Brent has gained over 4% since the start of 2024 with prices trading above $80 as of writing. Key levels of interest can be found at $7, $82 and $82.80.

Lukman Otunuga is Senior Financial Market Analyst with FXTM

Note;

FXTM is a leading provider of financial education in forex, stocks, indices and commodities trading, dedicated to empowering individuals with the knowledge and tools they need to succeed in the financial markets. With a team of experienced professionals and a commitment to excellence, FXTM offers a range of services, including seminars, webinars, and personalized coaching.

Next Financial Markets Trading Seminar, scheduled for August 17th at FXTM Head Office in Lagos.

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Unlike the United States which has witnessed consumer prices coming down from a peak of 9.1% in June 2022, Nigeria’s inflation remains hot, stubborn, and unyielding.

The current annual inflation rate for Africa’s largest economy stands at a whopping 22.8 % – its highest since September 2005.

With the inflation beast drawing strength from rising food prices, transportation, and import costs, it is forecast to tick even higher for July. Ultimately, persistent signs of rising inflation may force the Central Bank of Nigeria to act once again at its next policy meeting in September.

It is worth keeping in mind that the CBN has recently lifted its benchmark rates by 25bp to 18.75% – its fourth consecutive rate hike in 2023. While higher rates have the potential to cap and control inflation, it could come at the cost of economic growth which expanded by 2.31% during the first quarter of 2023.

In the currency space, the Naira took another beating on the black-market exchange last Friday.

The local currency slumped to N932 as dollar shortages worsened two months after the CBN adopted a flexible exchange rate regime. Should the current themes negatively impacting the Naira remain present, prices may hit N1000 in a matter of time. Such a development that will most likely increase the cost of living and squeeze households further in the short to medium term.

Outside of Nigeria, we have witnessed how higher interest rates have somewhat capped and controlled inflation albeit at a price. For Africa’s largest economy, the key question is when will inflation eventually peak?

The US Dollar & Fed Minutes 

Dollar weakness could become a major theme in the second half of 2023 as the Fed concludes its hiking cycle. 

With inflationary pressures easing in the United States and the Federal Reserve shifting to data dependence for future monetary policy decisions, the odds of another hike are falling significantly. According to Fed fund futures, traders are only pricing in only a 10% chance of a rate hike in September and 32% probably by November 2023.

Should expectations become reality, the USD is likely to weaken against not only G10 majors but emerging market currencies over the next few months. The pending Fed meeting minutes are likely to accelerate the potential dollar selloff if they strike a dovish tone.

Commodity Spotlight – Oil 

Oil prices have the potential to push higher amid growing optimism over the global demand outlook. According to the International Energy Agency, global demand for oil has surged to a record thanks to strong consumption from China.

On the supply side, production cuts from OPEC+ have fueled concerns around tighter supply, further supporting upside gains.

Focusing on the technical picture, Both WTI Crude and Brent are trading near key resistance levels and may experience a breach to the upside in the short to medium term. After experiencing a rebound back in June, an oil trade back to $100? Time will tell. 

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