Investment banking firm CardinalStone has projected a 300–400bps Monetary Policy Rate (MPR) cut in 2026 as macro stability improves, supporting manufacturing output and broader economic growth.
This is according to CardinalStone Partners’ 2026 economic outlook report, “Indicators Align for Sustained Macro Gains”.
The anticipated policy shift is expected to improve credit conditions, lower financing costs, and stimulate activity across manufacturing and financial services.
What the report is saying
CardinalStone said sustained macroeconomic stability, combined with a lower policy rate, would support improved credit access and higher manufacturing output in 2026.
“We expect sustained macro stability and a projected 300-400bps monetary policy rate cut to improve credit conditions and support manufacturing output in 2026. Sector support is also likely to stem from improved refining capacity in 2026,” the firm stated.
- According to the firm, easing interest rates would reduce financing pressures on manufacturers, encourage capacity expansion, and improve access to working capital, particularly for firms that have been constrained by elevated borrowing costs.
- In addition, the report stated, improved domestic refining capacity is expected to lower energy-related bottlenecks and input costs, providing further support for industrial production.
- Beyond manufacturing, CardinalStone expressed optimism about the financial services sector, projecting stronger growth driven by higher fee-based income and expanding credit activity.
The firm noted, “We expect financial services to report higher growth of 20.3% in 2026 (17.6% in 2025) on higher banking fees.”
The outlook noted that credit-related fees—currently the largest component of banks’ non-interest income—are likely to increase as lower borrowing costs spur demand for loans and broader credit creation.
Improved macroeconomic conditions and non-performing loan (NPL) ratios remaining within regulatory thresholds are also expected to support a more favourable credit growth environment.
CardinalStone added that electronic banking fees would remain a major growth driver in 2026, reflecting banks’ continued investments in digital infrastructure, fintech collaborations, and expanded electronic payment channels.
“In addition to expected momentum from credit, electronic banking fees are also likely to be an important driver in 2026, reflecting banks’ aggressive investment in digital transformation,” CardinalStone said.
What you should know
- Nigeria’s MPR has remained elevated as the Central Bank focuses on curbing inflation and stabilising the macroeconomic environment.
- At its last MPC meeting, CBN voted to hold the policy rate at 27%.
- Manufacturers have consistently cited high interest rates and energy costs as major constraints to growth.
- Banks have increasingly relied on non-interest income, particularly electronic banking and credit-related fees, to drive earnings amid volatile economic conditions.
