The Central Bank of Nigeria (CBN) is widely expected to keep its benchmark interest rate unchanged through the rest of 2026 as persistent inflation risks linked to global oil prices, domestic energy costs and pre-election fiscal spending outweigh calls for monetary easing, economists have said.
The expectation follows last week’s decision by the Monetary Policy Committee (MPC) to leave the Monetary Policy Rate (MPR) unchanged at 26.5 percent for a second consecutive meeting, underscoring policymakers’ cautious approach despite signs that inflation is gradually moderating.
Most analysts believe the central bank will prioritise price and exchange rate stability over supporting growth, warning that cutting rates too early could reverse recent gains in disinflation, weaken the naira and erode foreign portfolio inflows.
Ken Ife, a development economist and macroeconomic analyst, said the balance of risks remains firmly tilted towards keeping monetary policy tight, citing renewed geopolitical tensions in the Middle East, higher crude oil prices and mounting domestic cost pressures.
According to Ife, Brent crude prices climbing above $100 per barrel have pushed up shipping and insurance costs, while the escalation of tensions in the Strait of Hormuz has added fresh uncertainty to global energy markets. At the same time, Nigeria is facing increased pressure on foreign exchange from a sharp rise in refined petroleum imports.
“It is too early to talk about easing the Monetary Policy Rate because the inflation risk is far too high,” Ife said.
He noted that refined petroleum import licences have risen by about 207 percent, increasing demand for foreign exchange and adding to domestic price pressures. He also pointed to supply constraints at the Dangote Refinery, which he said is operating below the crude supply required to meet local demand, forcing it to source foreign exchange independently to bridge supply gaps.
Combined with a recent increase of more than N100 in petrol pump prices and elevated food inflation, these developments leave little room for policy easing, he argued.
“The CBN sees all these and needs to hold the MPR for now,” Ife said, adding that the central bank is unlikely to consider lowering rates while geopolitical tensions continue to threaten global oil and shipping markets.
Abiodun Keripe, managing director of Afrinvest Consulting Limited, also expects the MPC to maintain its current policy stance through the remainder of the year, although for slightly different reasons.
He said the recent moderation in headline inflation, resilient domestic economic activity and relative stability in the foreign exchange market justify maintaining current policy settings while authorities assess whether inflation is easing on a sustained basis.
“I expect the MPC to maintain the MPR at current levels through the remainder of 2026,” Keripe said. “Before easing, the committee will likely require sustained disinflation, continued exchange rate stability, anchored inflation expectations and confidence that real interest rates remain sufficiently positive to preserve investor confidence.”
According to him, the biggest domestic risk over the coming months will be increased fiscal spending ahead of the 2027 general elections, which could inject additional liquidity into the economy and place renewed pressure on inflation and the exchange rate.
“A premature rate cut could slow the pace of disinflation, increase pressure on the naira and weaken foreign portfolio inflows by narrowing Nigeria’s interest rate differential,” he said.
While lower interest rates could support borrowing and economic growth, Keripe said policymakers are more likely to focus on preserving macroeconomic stability. Afrinvest has revised its average inflation forecast for 2026 to 15.8 percent from 15.4 percent, reflecting lingering energy price shocks and expectations of a modest depreciation of the naira toward N1,400 per dollar.