Norrenberger Forecasts 350bps Monetary Policy Rate Cut In 2026

Analysts project further monetary easing this year, with the Monetary Policy Rate (MPR) potentially falling by 200–350 basis points by year-end, according to Norrenberger’s 2026 economic outlook.

At its most recent meeting, the Monetary Policy Committee (MPC) cut the benchmark interest rate by 50 basis points to 26.5 per cent, signalling a shift from the tightening stance that defined much of 2024 and 2025. That stance was aimed at controlling inflation and stabilising the foreign exchange market.

Norrenberger’s report says that with inflation easing and external buffers improving, there is room for measured rate cuts, contingent on sustained disinflation and exchange rate stability.

Inflation, which peaked at 34 per cent in December 2024, dropped to 27.6 per cent in January 2025 and further to 15.15 per cent by December 2025, aligning broadly with the federal government’s 15 per cent target.

Looking ahead, the report forecasts inflation trending lower in 2026, though it expects a possible temporary uptick early in the year due to festive demand and routine price adjustments. Thereafter, inflation is projected closer to 10 per cent by year-end, supported by stronger food supply, lagged effects of tight monetary policy, and a more stable exchange rate.

Norrenberger also expects the naira to trade between N1,400 and N1,450 at the official window in 2026, anchored by increased diaspora remittances, improved trade balances, stronger foreign portfolio investment, and continuing FX market reforms.

After the volatility following the 2023 FX reforms, the naira showed relative stability in 2025, closing at N1,429 per dollar at the official NAFEM window, compared to N1,535 at the end of 2024.

However, the report notes that risks remain, especially as Nigeria enters the pre-election period ahead of 2027, which historically brings higher forex demand, speculative pressures, and fiscal expansion.

On growth, Norrenberger projects real GDP growth of 4–5 per cent in 2026, supported by stronger business activity, improved investor confidence, and expansion in the services sector. Nigeria’s real GDP grew 3.79 per cent in the first nine months of 2025, outpacing the 3.23 per cent recorded in the same period of 2024. Full-year growth is estimated at between 3.9 per cent and 4.05 per cent.