The International Monetary Fund has advised the Central Bank of Nigeria and other monetary authorities not to rush into cutting interest rates, as global inflation pressures have yet to fully ease despite signs of recovery in some economies.
The warning is contained in the IMF’s latest 13-page World Economic Outlook update, which noted that while output has begun to improve modestly in some regions, inflation remains a key concern. The Fund said monetary authorities must carefully balance efforts to support economic growth with the need to maintain price stability.
“Monetary policymakers in countries where inflation is at or close to target should rely on a forecast-centered approach,” the report said.
It added that “where economies are experiencing negative demand shocks, a gradual reduction in policy rates may be considered to cushion economic activity, provided risks to price stability objectives are contained.”
The IMF further stated that countries where inflation remains above target levels should proceed with restraint and rely on economic data before taking action.
“In economies facing adverse supply shocks, policymakers confront complex trade-offs between the risk of a growth slowdown and the risk of persistent inflation. In such cases, further monetary easing should proceed only where there is robust evidence that inflation expectations remain anchored and inflation is returning toward target,” the document added.
The Fund also stressed the need for clear and consistent communication by central banks to keep inflation expectations stable. It reaffirmed that the legal and operational independence of monetary authorities remains vital for long-term growth and price stability.
In Nigeria, inflation was recorded at 15.15 percent in December, while the benchmark interest rate remained at 27 percent after the Monetary Policy Committee meeting held in November 2025.
The next MPC meeting of the Central Bank of Nigeria is scheduled for February 23 and 24, 2026.
