The Central Bank of Nigeria is highly likely to raise its benchmark interest rate, the Monetary Policy Rate, during the second half of 2026 as liquidity pressures build ahead of the 2027 general elections.
This warning was issued on Wednesday by renowned capital market economist Prof Uche Uwaleke during the Arthur Steven Asset Management mid-year review webinar titled “Mid-Year Macroeconomic Review & Outlook for H2 2026”.
Uwaleke highlighted that historical data points towards a surge in liquidity during the penultimate year leading up to national elections, which typically forces the central bank’s hand.
He said, “The year 2026 is a penultimate election year, and the preponderance of the historical evidence is that inflation is usually slightly higher, caused by pre-election spending. If inflation is demand-driven, as a result of money supply, of course, you will expect that the central bank will hike the interest rate.”
According to him, a further rate hike would create a divergence in the financial markets, redirecting capital flows away from equities.
