Analysts predict interest rate stability as Nigeria enters election season

Financial analysts have projected that Nigeria’s Monetary Policy Committee (MPC) will likely maintain its current interest rate stance as the country moves closer to the 2027 general elections.

The views were shared during the latest episode of the Drinks and Mics podcast hosted by Ugo Obi-Chukwu, where panelists assessed Nigeria’s monetary policy outlook for the remainder of 2026.

Nigeria’s next general election is scheduled for January 2027, with political campaigns expected to intensify in the coming months.

What they are saying

The discussion focused on the trajectory of interest rates during the first half of 2026. Earlier market expectations had pointed to cumulative rate cuts of between 300 and 500 basis points this year, but only a 100-basis-point reduction has been delivered so far.

Speaking on the podcast, Arnold Dublin-Green, Managing Director and Chief Executive Officer of Asset Management at Renaissance Capital Africa, said external geopolitical developments had significantly altered the outlook.

• “The war blew up all the predictions. Nobody could have predicted Benjamin Netanyahu. Inflation stayed higher. Everybody went into inflation frenzy,” he said, referring to the impact of the conflict involving Iran and broader global market uncertainties.

Founder and CEO of Awabah, Tunji Andrews, said expectations for further aggressive easing may be unrealistic.

• “I think we’ll be lucky to finish the year with a total of 150 basis points in cuts. We’ve already done 100 basis points, and we’ll be lucky to get another 50 before year-end,” he said.

However, Chidozie Okonkwo, Founder and CEO of ZINNC, believes the MPC may avoid further adjustments altogether.

• “We’re entering an election cycle. I think they are not going to want to rock the boat or do anything dramatic. The best approach may simply be to do nothing and do no harm,” he said.

More insights

Dublin-Green argued that while the MPC may hold benchmark rates steady, monetary tightening is already occurring through the debt market.

According to him, treasury bill yields have been rising sharply, with some instruments recording increases of about 100 basis points week-on-week, while recent bond auctions have cleared above 18%.

• “Treasury bill yields are going to price the hike. They may hold policy rates because they can tighten through the capital markets,” he said.

He added that the government has multiple incentives to maintain attractive yields, including funding requirements and exchange rate stability.

• “They’re making yields more attractive because they need to raise money, particularly as the election season approaches. On the foreign portfolio investment side, authorities also need to keep the currency stable,” he noted.

Podcast host, Ugo Obi-Chukwu, observed that the higher-yield environment is already impacting liquidity conditions.

• “They are effectively sucking money out of the system. We’ve seen demand consistently outstrip offers in recent auctions,” he said.

Analysts bullish on crude oil below $80

The panelists were also asked for their outlook on crude oil prices if Brent crude remains below $80 per barrel during the second half of 2026.

All three analysts expressed a bullish view, recommending a “buy” position.

According to Andrews, global oil supply remains abundant despite geopolitical tensions.

• “Once the Strait of Hormuz reopened, supply concerns eased. There is a lot of production coming into the market. Nigeria has increased output, Venezuela is gradually returning, and the only thing that could significantly push prices higher is another major conflict,” he said.

Dublin-Green shared a similar view, predicting that oil prices are likely to remain around current levels for the rest of the year.

Okonkwo also argued that a diplomatic resolution remains the most probable outcome.

• “I don’t see a scenario where some form of agreement is not reached. There has been a lot of new production recently. There is oil everywhere,” he said.

Obi-Chukwu added that crude prices failed to spike dramatically despite recent tensions because global markets remain adequately supplied and governments are struggling to absorb the economic impact of higher energy costs.

What you should know

At its 305th meeting held in May 2026, the Monetary Policy Committee of the Central Bank of Nigeria (CBN) retained the Monetary Policy Rate (MPR) at 26.5%, while leaving all other key monetary policy parameters unchanged.

The decision reflected the committee’s cautious stance as it continues to monitor inflation trends, exchange rate developments, and broader macroeconomic conditions.

The MPC had earlier reduced the benchmark rate by 50 basis points at its 304th meeting in February 2026, lowering the MPR from 27% to 26.5%. The move marked the first interest rate cut following an extended monetary tightening cycle aimed at curbing inflation and stabilising the economy.

The next MPC Meeting will hold on July 21, 2026.

With inflation still elevated and election-related spending expected to increase over the coming quarters, analysts believe policymakers are likely to prioritise stability over aggressive monetary easing for the remainder of the year.