The Central Bank of Nigeria (CBN) may increase its benchmark interest rate, known as the Monetary Policy Rate (MPR), in the second half of 2026 as rising liquidity linked to preparations for the 2027 general elections could fuel inflation.
The projection was made by capital market economist, Prof. Uche Uwaleke, during the Arthur Steven Asset Management Mid-Year Macroeconomic Review and Outlook webinar.
Uwaleke explained that historical trends show inflation often rises in the period leading to general elections due to increased spending, which may prompt the CBN to tighten monetary policy by raising interest rates.
He noted that a higher interest rate would likely affect the stock market negatively, as investors may move their funds from equities to fixed-income investments that offer higher returns.
According to him, the CBN’s decision will depend largely on the government’s fiscal discipline and the conduct of political actors. He said that if excessive spending and other inflationary pressures are controlled, the apex bank may decide against another rate hike.
The economist advised investors to consider increasing their exposure to fixed-income assets if interest rates are raised.
Also speaking at the webinar, the Director-General of the Securities and Exchange Commission, Dr. Emomotimi Agama, said the commission is implementing reforms to improve investor confidence and align Nigeria’s capital market with global trading standards.
In his remarks, the Managing Director and Chief Executive Officer of Arthur Steven Asset Management, Mr. Tunde Amolegbe, said the CBN’s monetary policy decisions will play a major role in determining the direction of the stock market in the second half of the year.
He added that factors such as corporate earnings, exchange rate stability, new listings on the stock exchange and political developments ahead of the 2027 elections will also shape market performance.
