International Monetary Fund IMF advises CBN, others on interest rate cut

The International Monetary Fund has cautioned the Central Bank of Nigeria and other monetary authorities against rushing into interest rate cuts, stressing that safeguarding price stability remains essential amid uneven global growth and lingering inflation pressures.

In its latest 13-page World Economic Outlook update, the IMF observed that although some economies are recording modest output recoveries, inflation continues to pose a major challenge. According to the Fund, central banks must strike a delicate balance between stimulating growth and preventing a renewed surge in inflation.

“Monetary policymakers in countries where inflation is at or close to target should rely on a forecast-centered approach,” the report said.

“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,” it added.

The IMF stated that in regions where inflation remains above target levels, policymakers should adopt a cautious, data-driven stance.

“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 underscored the importance of clear and consistent communication by central banks to keep inflation expectations firmly anchored, while reaffirming that the legal and operational independence of monetary authorities is crucial for sustainable growth and price stability.

In Nigeria, inflation stood at 15.15 percent in December, while the benchmark interest rate was held at 27 percent following the Monetary Policy Committee meeting in November 2025.

The CBN’s next MPC meeting is scheduled for February 23 and 24, 2026.