The expectation of lower interest rates has faded. For investors, that changes almost everything.
For much of this year, investors have been positioning for one outcome: lower interest rates.
When the Central Bank of Nigeria reduced the Monetary Policy Rate by 50 basis points to 26.5 percent in February, many interpreted it as the beginning of a gradual easing cycle. The expectation was straightforward. Inflation appeared to be moderating, monetary conditions would loosen over time, borrowing costs would decline, and investors would gradually rotate away from fixed income into equities and other risk assets.
That narrative no longer fits the facts.
At its July meeting, the Monetary Policy Committee voted unanimously to leave the benchmark rate unchanged at 26.5 percent for the third consecutive meeting. The decision itself was not unexpected. What changed was the message behind it. Rather than signalling another cut later this year, policymakers made it clear
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