The latest Purchasing Managers’ Index (PMI) report from Stanbic IBTC Bank has noted that, alongside structural reforms and the removal of protectionist policies, inflationary pressures are expected to ease, allowing for a 150 to 200 basis point rate cut in 2025, with further reductions in 2026.
In the report, the Head of Equity Research at Stanbic IBTC Bank, Muyiwa Oni, was quoted as saying, “Given that inflation is expected to remain softer compared to the 2024 average, interest rates are likely to be lower this year and next – we expect 150/200 bps rate cut in 2025 and 200/250 bps rate cut in 2026.
“These, in addition to structural reforms, removal of previous protectionist policies, and subsidising impact of the government’s flagship reforms, should help to support the medium-term economic growth path.”
The PMI report, which tracks business activity, shows that while business conditions remain in growth territory, expansion has slowed in recent months. The PMI for June 2025 stood at 51.6, down from 52.7 in May, reflecting a modest improvement in the private sector. Despite the slowdown, optimism remains high, particularly with expectations of greater investment and improved economic conditions in the second half of the year.
Oni maintains a positive outlook for Nigeria’s economy, forecasting a growth rate of 3.5% year-on-year in 2025, with potential for growth to reach 4.2% after the post-GDP rebasing. These developments suggest that the combination of easing inflation and lower interest rates will contribute to a more stable and sustainable economic recovery in the coming years.
What you should know
Inflation in Nigeria has been gradually decreasing in recent months, offering a glimmer of hope for the country’s economic stability.
According to data from the National Bureau of Statistics (NBS), the inflation rate dropped to 22.97% in May 2025, down from 23.71% in April.
This marks the second consecutive month of decline, suggesting that inflationary pressures may finally be receding.
Despite these positive developments, inflation remains well above the CBN’s target range, which means that monetary policy decisions will continue to be critical in the months ahead.
In the first half of 2025, the Central Bank of Nigeria’s Monetary Policy Committee (MPC) paused rate hikes twice, signaling a shift in approach amid easing inflation.
- Following a series of interest rate increases in 2024, designed to tackle rising inflation, the MPC decided to keep the policy rate at 27.50%. This cautious stance reflects a delicate balancing act between taming inflation and stimulating economic growth.
- The MPC’s next meeting is scheduled for July 21–22, 2025, where the committee is expected to provide further guidance on future monetary policy direction. .
- With inflation showing signs of easing and growth prospects improving, Nigeria’s economy appears poised for a period of recovery.
The anticipated interest rate cuts in 2025 will likely support economic activity, driving investment and consumer spending.
However, the CBN’s decisions in the upcoming MPC meeting will be crucial in determining the pace and effectiveness of these measures.
