Nigeria’s inflation rate could remain within the 15 per cent region or ease slightly for the rest of 2026, provided there are no major external shocks, particularly a sharp rise in global oil prices, an investment expert has said.
The outlook comes amid continued efforts by the Central Bank of Nigeria, CBN, to stabilise the naira, rebuild foreign reserves, contain excess liquidity and restore investor confidence in the economy.
Speaking on Nigeria's macroeconomic outlook, Robert Omotunde, Director and Chief Investment Officer at FBN Capital, said the relative stability of the naira was contributing to downward pressure on inflation and could support further improvement if confidence in the foreign exchange market continues to grow.
According to him, Nigeria had previously suffered from distortions and mispricing in the foreign exchange market, but current monetary and exchange-rate policies are focused on correcting those imbalances.
He said the CBN's priorities include building external reserves, restoring confidence and making the naira more attractive to foreign investors.
Omotunde argued that the currency could see further appreciation if those objectives are sustained, adding that the naira remained undervalued at its current level.
Despite the improving headline inflation trend, Omotunde warned that the volatility of food prices makes it difficult to predict inflation with absolute certainty.
He said Nigeria could avoid a return to inflation levels around 17 per cent and instead remain within the 15 per cent or slightly below-15 per cent range for the remainder of the year.
However, he identified the ongoing tensions in the Middle East as a major risk to that forecast.
A significant escalation capable of pushing crude oil prices above $100 per barrel, he said, could trigger a new round of inflationary pressures through higher energy and transportation costs.
Such a development could eventually lead to the repricing of petroleum products and create additional pressure on electricity costs, given the role of gas in powering much of Nigeria's electricity generation infrastructure.
“For now, we should still be fine,” he said, stressing that the outlook remains subject to unforeseen external volatility.
On monetary policy, the investment chief said he expects the CBN's Monetary Policy Committee, MPC, to remain cautious rather than rush into cutting interest rates.
According to him, loosening monetary policy too quickly could leave the economy vulnerable if fresh shocks emerge from rising oil prices, exchange-rate pressure or other macroeconomic risks.
He said the CBN appears determined to maintain its tight policy stance until key economic variables are sufficiently stable.
Rather than relying solely on the Monetary Policy Rate, MPR, Omotunde noted that the apex bank also has other instruments for managing liquidity in the financial system.
One of these is the issuance of Open Market Operation, OMO, bills, which the CBN can use to absorb excess money from the economy.
He explained that the decision to broaden participation in the OMO market could allow the CBN to attract more funds from individuals and corporate investors, particularly those seeking higher returns than are currently available on some government securities.
“The MPC can leave the MPR as a signal that it is still hawkish and not ready to loosen yet,” he said.
The broader use of OMO operations, he added, could help the CBN mop up excess liquidity, thereby maintaining pressure against inflation.
The opening up of OMO bills to more investors has also raised questions about whether attractive fixed-income returns could pull money away from the Nigerian equities market.
Omotunde acknowledged that higher OMO yields could make fixed-income securities more attractive to some investors.
At the levels discussed, OMO instruments could offer discount rates of around 20 to 20.5 per cent, translating into yields of approximately 25 per cent at the longer end.
However, he does not expect this to trigger a major sell-off in equities.
He argued that investors allocate money across different asset classes based on their individual strategies, risk appetite and investment horizons.
While the stock market could lose some investor attention to high-yield fixed-income securities, he said equities still offer potentially higher returns.
“The stock market has the capacity to do 50 per cent in one month, depending on which portfolios you put your money in,” he noted.
He also expects the current disparity between yields on Treasury Bills and OMO bills to narrow over time, reducing the possibility of a prolonged imbalance between the two markets.
Looking ahead, Omotunde described Nigeria's broader investment outlook as bullish, citing ongoing economic reforms and efforts to restore macroeconomic stability.
He said the key challenge for the government is ensuring that the gains from those reforms translate into broad-based prosperity for Nigerians.
According to him, economic stabilisation alone will not be enough unless it leads to increased investment, job creation and improved welfare.
The 2027 general election was identified as a potential concern, particularly because political activities could slow economic decision-making and shift attention toward electoral considerations.
Omotunde said economic activity could become less focused in the period leading up to the election, as politicians increasingly turn their attention to campaigns.
However, he expressed optimism that an early election timetable could allow the country to return quickly to economic policy implementation once the outcome is known.
He said Nigeria must sustain its reforms and continue rebuilding investor confidence to attract more foreign capital, particularly Foreign Direct Investment, FDI.
Such investments, he argued, would be crucial to creating jobs, improving productivity and placing the economy on a stronger and more sustainable growth path.
The discussion ultimately highlighted Nigeria's central economic challenge: maintaining macroeconomic stability while ensuring that ordinary citizens feel the benefits of reform.
With inflation projected to remain relatively contained, the naira showing greater stability and monetary authorities maintaining a tight grip on liquidity, the immediate outlook may be improving.
But the success of Nigeria's economic reforms will ultimately be measured not only by inflation figures, exchange rates or reserve levels, but by whether they attract investment, create jobs and deliver meaningful improvements in the living standards of Nigerians.
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