Standard Chartered sees Nigeria's 2026 rates ending at 25%
Standard Chartered has slashed its 2026 Nigerian rate cut forecast to just 150 basis points due to stubborn inflation, signaling prolonged tight monetary conditions for investors.
Standard Chartered now expects the Central Bank of Nigeria to lower its benchmark rate by just 150 basis points in 2026, ending the year at 25%. The bank’s previous forecast had been under review, but persistent price pressures have forced a drastic reassessment of the anticipated easing cycle.
The lender sharply revised its 2026 average inflation forecast to 15.5%, up from a prior estimate of 12%. It also raised its outlook for next year to 14.7% from 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 said.
For investors pricing Nigerian sovereign debt or corporate credit, this implies real borrowing costs will stay elevated well into next year. The reality of persistent inflation leaves the central bank with little room to accommodate growing calls from the private sector for cheaper credit.
The current data backs this hawkish tilt. Headline inflation accelerated to 15.93% in May, up from 15.69% in April, pushing the Consumer Price Index to 140.7 points. Economists anticipate the June inflation report, due on Wednesday, could push the annual figure above 16%.
The CBN has already cemented a wait-and-see approach. At its May 20 meeting, the committee kept the MPR at 26.5% after a sole 50-basis-point cut in February. It maintained a tight 45% Cash Reserve Ratio for commercial banks to sustain restrictive conditions.
For markets betting on a sooner pivot, Standard Chartered advises patience. The bank projects that meaningful monetary relief will only materialize after the January 2027 elections. It anticipates a 700-basis-point reduction post-election, followed by an additional 350 basis points in 2028, as macroeconomic conditions stabilize.
A hotter-than-expected June print next week will likely reinforce this timeline. Such a reading would all but lock in a rate hold at the CBN's July 21 meeting, extending the timeline for yield compression in Nigerian fixed income.
