Standard Chartered Plc has revised its outlook for Nigeria's monetary policy, projecting that the Central Bank of Nigeria will deliver only 150 basis points of interest rate cuts through 2026, leaving the Monetary Policy Rate at 25% by year-end.
The more cautious forecast, outlined by Razia Khan, Chief Economist for Africa and the Middle East at Standard Chartered, reflects the bank's assessment that lingering inflationary pressures have materially constrained the scope for aggressive monetary easing.
Alongside the rate outlook, Standard Chartered raised its average inflation forecast for 2026 to 15.5%, a sharp revision from an earlier projection of 12%. Next year's inflation estimate was also lifted to 14.7% from a prior forecast of 13.8%.
"We now see inflation averaging 15.5% in 2026 compared with 12% previously and 14.7% next year from a prior forecast of 13.8%. We now see scope for 150 basis points of policy easing in 2026 — previously under review — taking the monetary policy rate to 25% at year-end," Khan stated in the investment note.
Despite the restrained outlook for the remainder of this year, Standard Chartered expects a more substantial loosening cycle to commence after the political calendar clears. Khan projects the CBN could reduce rates by as much as 700 basis points following the January 2027 elections, with an additional 350 basis points pencilled in for 2028, as inflation moderates and broader macroeconomic conditions improve.
The CBN has signalled its intention to maintain a cautious posture. At the conclusion of the 305th Monetary Policy Committee meeting on 20 May, the committee held the MPR unchanged at 26.5%, extending the wait-and-see approach adopted after February's 50-basis-point cut. The committee also left the Cash Reserve Ratio at 45% for commercial banks and 16% for merchant banks, kept the Standing Facilities Corridor at +50/-450 basis points around the MPR, and retained the 75% CRR on non-TSA public sector deposits.
The MPC justified its decision by citing the need to sustain tight monetary conditions amid renewed inflationary pressures, including consecutive increases in headline inflation recorded in March and April, while allowing additional time to evaluate the impact of prior policy measures on price stability.
Data from the National Bureau of Statistics showed headline inflation rose to 15.93% in May 2026, up from 15.69% in April, with the Consumer Price Index climbing to 140.7 points from 138.3 points. Although annual averages for food, urban, rural and core inflation have continued to decline relative to the prior year, economists expect the June inflation reading — due from the NBS on Wednesday — to edge above 16%.
A higher-than-expected June CPI print would likely reinforce the CBN's cautious stance and strengthen market expectations that interest rates will remain elevated for longer, even as businesses intensify calls for lower borrowing costs. The next MPC meeting is scheduled for 21 July.
