A recent economic report by Stanbic IBTC Bank projects that Nigeria may see interest rate reductions of between 150 and 200 basis points in 2025, and possibly 200 to 250 basis points in 2026, amid falling inflation and ongoing structural reforms.
The insights were revealed in the bank’s latest Purchasing Managers’ Index (PMI) report, which also attributes the easing of inflationary pressure to the discontinuation of previous protectionist policies.
Muyiwa Oni, Head of Equity Research at Stanbic IBTC Bank, remarked, “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 a 150 to 200 basis point rate cut in 2025 and a 200 to 250 basis point rate cut in 2026. These, in addition to structural reforms, the removal of previous protectionist policies, and the subsidising impact of the government’s flagship reforms, should help to support the medium-term economic growth path.”
The PMI for June 2025 registered at 51.6, a slight dip from 52.7 recorded in May. Though the rate of expansion has slowed, the reading still signals growth in private sector activity. The bank anticipates a stronger second half of the year, driven by increased investment flows and improving macroeconomic conditions.
Oni projects that Nigeria’s GDP will expand by 3.5% year-on-year in 2025, with post-GDP rebasing figures potentially pushing growth to 4.2%. These projections reinforce optimism that lower inflation and looser monetary policy will spur economic recovery.
Inflation figures released by the National Bureau of Statistics (NBS) reflect a downward trend. Nigeria’s inflation rate fell to 22.97% in May 2025, down from 23.71% in April, indicating the second straight month of decline—a development that could signal easing price pressures.
Nevertheless, inflation remains well above the Central Bank of Nigeria’s (CBN) target range, suggesting that monetary policy decisions will remain vital in the near term.
During the first half of 2025, the CBN’s Monetary Policy Committee (MPC) paused interest rate hikes on two occasions. After multiple rate increases throughout 2024 aimed at stemming inflation, the MPC held the policy rate steady at 27.50%, indicating a cautious shift in stance as economic conditions begin to stabilise.
The next MPC meeting is slated for July 21–22, 2025, during which the committee is expected to offer further guidance on the direction of interest rates and overall policy posture.
With inflation cooling and growth forecasts improving, Nigeria’s economy is showing signs of a potential rebound. The anticipated rate cuts are expected to stimulate consumer demand, support business expansion, and foster broader economic momentum.
