The Central Bank of Nigeria (CBN) has delivered inflation-positive stop rates on Nigerian Treasury bills in 2025, defying market expectations amid a sustained moderation in headline inflation.
At its latest auctions, the monetary authority adjusted Treasury bill pricing upward, a move that caught many market participants off guard as investors had largely anticipated a gradual softening of spot rates in line with easing inflationary pressures.
Instead, the CBN increased the risk premium on Treasury bills even as inflation decelerated and the naira remained relatively stable. Some analysts interpreted the decision as a signal of cautious monetary management, while others suggested it could reflect efforts to manage liquidity conditions and preserve investor confidence.
Nigeria currently operates with a benchmark Monetary Policy Rate of 27% against a headline inflation rate of 14.45%, leaving real interest rates firmly positive at about 12.55%. Analysts say this wide real yield spread is unlikely to narrow materially in the near term, even with recent declines in petroleum pump prices.
At the most recent auction, the Apex Bank sold one-year Treasury bills at a stop rate of 17.51%, following two consecutive upward adjustments in spot rates. The yield on 91-day bills rose by 20 basis points to 15.50%, while the mid-tenor instruments saw a sharper 45-basis-point increase to 15.95%.
Market observers noted that the move contradicted prevailing assumptions that spot rates would decline as inflation continued to cool. “The surge in stop rates is unexpected, given improving inflation dynamics, currency stability, and expectations of a potential policy rate cut in early 2026,” analysts told MarketForces Africa.
Nigeria’s inflation outlook has improved steadily in recent months. Data from the National Bureau of Statistics showed that headline inflation eased to 14.45% year-on-year in November 2025, down from 16.05% in October. This marked the eighth consecutive month of disinflation since the rebasing of the consumer price index earlier in the year.
According to Cowry Asset Management, the sustained slowdown reflects easing pressures across both food and core inflation, supported by calmer foreign exchange conditions and the delayed impact of tight monetary policy. The combination of an elevated policy rate and constrained liquidity appears to be tempering demand-side pressures.
While year-on-year inflation has trended downward, month-on-month data painted a more mixed picture. Headline inflation rose to 1.22% in November from 0.93% in October, driven largely by energy-related costs. The energy index climbed 1.08% month-on-month, reflecting higher fuel and cooking gas prices.
Food prices also rebounded modestly, with the farm produce index rising by 0.79% after remaining flat in October. Services inflation increased to 1.82%, while the goods sub-index rose to 0.79%, highlighting persistent cost pressures across key consumption segments.
Food inflation on an annual basis fell sharply to 11.08% in November 2025 from 39.93% a year earlier, largely due to base effects following CPI rebasing. However, on a monthly basis, food inflation returned to positive territory at 1.13% after two months of deflation.
Core inflation continued its downward trajectory, easing to 18.04% year-on-year from 28.75% in November 2024. Month-on-month core inflation also slowed to 1.28%, indicating gradual normalization of underlying price pressures.
Cowry Research noted that while the overall inflation trend remains disinflationary, short-term risks persist, particularly from festive-season spending and renewed foreign exchange demand tied to imports. The firm projects headline inflation to edge higher to 14.72% in December 2025, bringing the annual average inflation rate to 20.50%.
Following the Treasury bill auction, buying interest returned modestly to the secondary market, reversing earlier bearish sentiment as investors took advantage of strong system liquidity. Analysts at Meristem Securities expect stop rates to hover around current levels, with a mild upward bias at the long end of the yield curve.
Meanwhile, the Debt Management Office reinforced expectations of further yield repricing by increasing bond rates at its most recent auction, despite ample system liquidity of ₦2.59 billion as of mid-December 2025.
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