According to the Economist Intelligence Unit (EIU), Nigeria’s Monetary Policy Rate (MPR) is expected to drop to 12.5 percent by 2026 and remain steady thereafter, contingent on a decrease in inflation.
Despite inflation levels projected to remain above the Central Bank of Nigeria’s (CBN) target range of 6-9 percent, the EIU anticipates the CBN to adopt a more accommodative stance, initiating rate cuts in early 2026.The EIU report suggests that reduced interest rates could have various effects on the economy. Lower interest payments on loans, including mortgages and personal loans, could stimulate consumer spending, particularly on significant purchases like homes and cars.
However, this decrease in borrowing costs may lead to lower returns on savings accounts and other interest-bearing investments, potentially prompting investors to seek higher returns in riskier assets. Businesses are also poised to benefit from lower interest rates, as borrowing costs for expansion and investment purposes decrease.
Source: Business Day