Nigeria’s benchmark Monetary Policy Rate (MPR), otherwise known as the interest rate, holds steady at 27% after the Central Bank of Nigeria’s (CBN) maintained the MPR at 27% in its last Monetary Policy Committee (MPC) meeting in November 2025. Investors are optimistic about the interest rate forecast trend in 2026.
Following the Central Bank’s aggressive monetary policy tightening trends throughout 2024–2025, and the first rate cut in September 2025.
The CBN’s data-dependent stance has left markets debating the timing and magnitude of further moves of the interest rate in Africa’s most populous country, Nigeria.
Here are the five top Nigerian interest rate scenarios shaping investor expectations:
Gradual Easing (Base Case)
Most analysts expect measured rate cuts if disinflation continues. Headline inflation fell to 15.52% in November 2025. The CBN average rate in 2026 is 12.94%,
According to the Apex Bank, this would be driven by Naira stability, higher agricultural yield productivity, and higher oil output.
The CBN could cut the MPR by 100–200 basis points across multiple meetings, potentially bringing the rate to the 20–23% range by year-end.
In this scenario, this would ease borrowing costs, support private-sector credit, and help to achieve the projected GDP growth of 4.49% in 2026.
Prolonged High Rates (Hawkish Scenario)
Nigeria’s persistent fiscal pressures could keep rates elevated. The 2026 budget anticipates a deficit of ₦12–24 trillion.
The nation’s debt servicing portfolio is already consuming a large share of the total revenue. According to analysts, this is becoming worrisome.
The MPR could remain above 25% through much of 2026, preserving high yields on treasury bills and bonds but squeezing corporate profitability.
If the country’s borrowing continues to increase in 2026 as anticipated or if oil prices, which are one of the leading government revenue source fall below the assumed $55 per barrel, inflationary pressures could re-emerge. This will thereby force the CBN to hold or even hike the interest rates.
Asymmetric Corridor Adjustments as Early Signals
The domestic investors and international investors via the Foreign Direct Investment (FDI) pathways are closely watching the CBN’s asymmetric corridor around the MPR (currently standing deposit and lending rates) for policy hints on the direction that the nation’s economy will go in 2026.
Nigeria’s Foreign Direct Investment (FDI) rebounded in Q3 2025, increasing to $720 million, a 700% increase from $90 million in Q2.
Any narrowing of the corridor or shifts in cash reserve requirements could precede formal rate changes. If this happens, it will provide clues about the bank’s bias well before MPC announcements.
Global and External Shocks Scenario
External factors remain a wildcard. Renewed global geopolitical tensions, like the USA and NATO allies’ face-off over Greenland’s control, could impact the global market.
This could also slightly impact the global GDP growth outlook, which the World Bank had projected the global economy to grow by 2.6% in 2026.
Stronger global financial conditions or a marginal drop in commodity prices could disrupt forex inflows and reignite inflation.
This will compel the CBN to adopt a more cautious stance. More robust remittance inflows could support faster domestic easing.
The next CBN MPC meeting will be held in February 2026. That will be the 304th MPC meeting. The meeting will serve as the first major test of the CBN’s direction for the Full-Year 2026.
The fixed-income investors will hope for much more sustained high rates to lock in yields, while the equity and growth investors eagerly anticipate the easing of the rates in order to drive broader market recovery.
The CBN’s delicate balancing act between inflation control and economic support will define portfolio strategies throughout the year, even as the CBN, the World Bank, and the IMF all project the Nigerian economy to grow by 4.49%, 4.4%, and 4.4%, respectively.
