Nigeria’s Slowing Inflation Strengthens Case for Interest Rate Reduction

Nigeria’s headline inflation eased unexpectedly in January, dropping to 15.10 per cent, slightly below analysts’ predictions of around 19 per cent. The latest data show a marginal decline from 15.15 per cent in December 2025, supported largely by softer food prices and other moderating price pressures.

Economists and market analysts say this surprise moderation in inflation could give the Central Bank of Nigeria’s Monetary Policy Committee room to consider a cut in interest rates when it meets later this month. The potential easing comes after months of tight monetary policy aimed at curbing rising prices and stabilising the exchange rate.

Analysts argue that a measured interest rate reduction might help lower borrowing costs for households and businesses, though inflation remains above long‑term targets. Some experts warn that premature rate cuts could jeopardise recent gains in price stability and currency strength.

Overall, the unexpected dip in inflation has shifted market expectations, making a change in monetary policy more likely as policymakers weigh economic growth prospects against price stability.