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IMF warns against premature rate cuts amid persistent inflation pressures.
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Says monetary easing should be gradual and data-driven.
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Stresses need for price stability and central bank independence.
The International Monetary Fund (IMF) has advised the Central Bank of Nigeria (CBN) and other monetary authorities to avoid rushing into interest rate cuts, warning that inflation risks remain significant despite uneven global economic recovery.
In its latest 13-page World Economic Outlook update, the Fund noted that while some economies are witnessing modest growth rebounds, inflation continues to challenge policymakers, requiring a careful balancing act between supporting growth and maintaining price stability.
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According to the IMF, central banks in economies where inflation is at or near target levels should rely on a forecast-centred and cautious approach.
“Monetary policymakers in countries where inflation is at or close to target should rely on a forecast-centered approach,” the report stated.
It added that in countries experiencing negative demand shocks, a gradual reduction in policy rates may be considered to support economic activity, provided risks to price stability remain contained.
However, the Fund warned that in regions where inflation remains above target, monetary authorities should adopt a measured, data-driven stance.
“In economies facing adverse supply shocks, policymakers confront complex trade-offs between the risk of growth slowdown and the risk of persistent inflation,” the IMF said, stressing that further easing should only proceed where there is clear evidence that inflation expectations are well anchored.
The IMF also emphasized the importance of clear and consistent communication by central banks to maintain confidence, while reaffirming that legal and operational independence of monetary authorities is essential for sustainable growth and long-term price stability.
In Nigeria, inflation stood at 15.15 percent in December, while the benchmark interest rate remained at 27 percent following the Monetary Policy Committee (MPC) meeting in November 2025.
The CBN’s next MPC meeting is scheduled for February 23 and 24, 2026.
