Improved FX Stability, Lower Inflation Will Drop CBN Lending Rate To 24%— Analysts

Financial analysts at Cordros Research have projected that Nigeria’s Monetary Policy Committee (MPC) will sustain a gradual easing cycle through 2026, with a cumulative 300 basis points reduction in the Monetary Policy Rate (MPR) to 24.0 per cent, as inflation continues to trend downward and macroeconomic conditions improve.

In its 2026 Economic Outlook, Cordros Research forecast that headline inflation will average 16.30 per cent year-on-year in 2026, supported by a more stable foreign exchange environment, improved agricultural output and easing global commodity prices.

The analysts also expect sustained current account surpluses, steady capital inflows and robust external reserves to strengthen the naira further, creating room for cautious monetary easing.

Against this backdrop, Cordros said the MPC is likely to extend its shift away from the aggressive tightening stance adopted in recent years, while remaining firmly guided by the pace of disinflation, interest rate differentials and capital flow dynamics.

Despite the easing bias, the research firm noted that policy rates are expected to remain relatively high in order to anchor inflation expectations and preserve the attractiveness of naira-denominated assets, particularly as major central banks globally move toward lower interest rates.

According to the outlook, as disinflation gains momentum and real interest rates turn increasingly positive, the MPC could implement rate cuts in measured steps, culminating in a 300bps reduction in the MPR to 24.0 per cent by the end of 2026.

This approach, Cordros said, would balance the need to support economic growth while safeguarding price stability and external competitiveness.

Beyond interest rates, the analysts also anticipate complementary adjustments to key liquidity management tools. Cordros projects that the Cash Reserve Ratio (CRR) for Deposit Money Banks will be reduced to 40.0 per cent from the current 45.0 per cent, while the CRR for Merchant Banks is expected to be cut to 12.0 per cent from 16.0 per cent.

In addition, a narrowing of the asymmetric corridor around the MPR is expected to reinforce the easing stance and improve system liquidity.

The research firm outlined alternative scenarios that could influence the pace and scale of policy easing.

Under a bull-case scenario, where inflation averages a lower 14.91 per cent year-on-year, Cordros expects a more decisive policy response, with a cumulative 400bps reduction in the MPR to 23.0 per cent by year-end.

Such an outcome, it noted, would be driven by stronger disinflation, firmer exchange rate stability and improved supply-side conditions.
Conversely, under a bear-case scenario in which inflation remains sticky and averages 18.70 per cent, the MPC is likely to adopt a more cautious approach.

In this case, Cordros expects only a modest 50bps rate cut, as policymakers prioritise preserving positive real returns and maintaining price stability amid lingering inflationary pressures.

Overall, Cordros Research said monetary policy decisions in 2026 will continue to be data-dependent, with the MPC carefully weighing inflation trends, external conditions and capital flow developments as it navigates the delicate balance between growth support and macroeconomic stability.