Standard Chartered sees Nigeria’s MPR ending 2026 at 25%

Nigeria’s monetary policy outlook has shifted firmly towards caution as Standard Chartered Plc. projects that the Central Bank of Nigeria (CBN) will end 2026 with its Monetary Policy Rate (MPR) at 25 per cent, only 150 basis points lower than current levels.

For investors, this signals that borrowing costs will remain elevated throughout the year, with limited room for aggressive easing.

The bank’s revised forecast, disclosed by Razia Khan, Chief Economist for Africa and the Middle East, also raised Nigeria’s average inflation projection for 2026 to 15.5 per cent, up from an earlier estimate of 12 per cent.

Inflation for 2027 is now expected at 14.7 per cent, compared with a prior forecast of 13.8 per cent. The higher inflation outlook has effectively reduced the scope for monetary easing, forcing the CBN to maintain a tighter stance.

Khan noted: “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.”

She added that more meaningful inflation moderation is expected after 2027, paving the way for deeper cuts. Standard Chartered projects that the CBN could reduce rates by 700 basis points after the January 2027 elections, followed by another 350 basis points in 2028, as macroeconomic conditions improve.

The cautious outlook comes against the backdrop of persistent inflationary pressures. Headline inflation rose to 15.93 per cent in May 2026, up from 15.69 per cent in April, according to the National Bureau of Statistics (NBS).

The Consumer Price Index climbed to 140.7 points in May from 138.3 points in April, with economists expecting June inflation to edge above 16 per cent. Such figures reinforce the CBN’s reluctance to ease aggressively, despite calls from businesses for lower borrowing costs.

At its 305th Monetary Policy Committee (MPC) meeting in May, the CBN retained the MPR at 26.5 per cent, extending its wait-and-see approach after a modest 50-basis-point cut in February.

The committee also left the Cash Reserve Ratio (CRR) unchanged at 45 per cent for commercial banks and 16 per cent for merchant banks, while maintaining the Standing Facilities Corridor at +50/-450 basis points around the MPR.

For the economy, Standard Chartered’s forecast underscores the tension between inflation control and growth. Elevated rates will continue to weigh on credit expansion and corporate borrowing, but the bank expects that once inflation moderates post‑2027, Nigeria could embark on one of its most aggressive easing cycles in decades.