Analysts at CardinalStone say Nigeria‘s near-term macroeconomic outlook remains constructive, underpinned by stronger fiscal fundamentals, improved external balances and a more stable foreign exchange market. The report cautions that global geopolitical risks, persistent inflation and the slow transmission of macroeconomic gains to households remain key challenges. Olaolu Boboye, Lead Economist and Fixed-Income Strategist at CardinalStone, joins CNBC Africa for this discussion.
Thu, 16 Jul 2026 14:17:23 GMT
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Key Points:
- CardinalStone said Nigeria’s near-term macroeconomic outlook remains constructive, supported by stronger fiscal fundamentals, improved external balances and a more stable foreign exchange market.
- The firm cited external reserves of about $51 billion, stronger crude oil revenue and moderating June inflation as evidence that conditions have improved.
- CardinalStone identified global geopolitical tensions and election-related uncertainty as the two biggest downside risks to Nigeria’s outlook.
- The firm expects the Central Bank of Nigeria to hold interest rates next week and through the rest of the year as inflation remains above comfort levels and election-related liquidity builds.
Topics
Nigeria economyCardinalStoneCentral Bank of NigeriaCBNNigeria inflationNigeria electionsforeign exchange marketexternal reservesmonetary policyAfrica markets
- CardinalStone said Nigeria’s near-term macroeconomic outlook remains constructive, citing stronger fiscal fundamentals, improved external balances and a more stable foreign exchange market.
- The firm pointed to external reserves of about $51 billion, stronger government oil revenue and moderating June inflation as signs that macro conditions have improved.
- CardinalStone said global geopolitical shocks and election-related uncertainty are the biggest downside risks to that outlook.
- The firm expects the Central Bank of Nigeria to hold interest rates at next week’s meeting and likely for the rest of the year as inflation stays elevated and liquidity risks build ahead of elections.
Nigeria’s near-term macroeconomic outlook remains constructive, CardinalStone said, as stronger fiscal metrics, improved external balances and a steadier foreign exchange market offset persistent inflation pressures, election-related uncertainty and broader global risks.
Speaking in a CNBC Africa interview, Oladipupo Owoeye, lead economist and fixed income strategist at CardinalStone, said the firm’s use of the word “constructive” reflects cautious optimism after reviewing key macro indicators including GDP, public finances, external balances and the foreign exchange market.
“Our constructive is like we’re saying we are optimistic, but in our optimism, we’re also a bit cautious because we understand that there are local risks and there are global risks which can affect or change the dynamics,” Owoeye said.
CardinalStone’s positive view is underpinned by a firmer external position. Owoeye said Nigeria’s external reserves had reached about $51 billion, while government revenues from crude oil sales had also improved. He added that June inflation data showed moderate easing, reinforcing the view that macro conditions have become more stable than earlier in the cycle.
That said, he cautioned that the biggest downside risks now sit outside Nigeria as much as within it.
Owoeye said global geopolitical tensions had already tested the outlook this year, pointing to the market fallout from tensions involving the United States and Iran, which pushed up energy prices. Although Nigeria is a crude exporter, he said the shock still filtered through to domestic fuel and energy costs, worsening affordability pressures for lower-income households.
“At the end of the day, we saw prices skyrocket across AGO, PMS, and that affected those at the bottom of the pyramid,” he said, referring to automotive gas oil and premium motor spirit. “What those at the bottom of the pyramid care about is moderating inflation. They want inflation to be as low as possible, affordability basically.”
The weakness in household purchasing power remains a central concern in CardinalStone’s outlook. While top-line macro indicators have improved, Owoeye said the benefits have yet to be transmitted meaningfully to ordinary Nigerians.
He said that disconnect is not unusual after major reforms, noting that policy changes of the scale Nigeria introduced in 2023 can take years to filter fully through the economy. Still, he said the pace of relief for households matters, especially as inflation remains high and election activity begins to reshape investor behavior.
CardinalStone also flagged domestic political risk as a second majornvestor caution, even if previous election cycles did not always produce severe macro dislocations
“People get jittery when the election is coming,” he said. Investors, he added, will be weighing whether the current administration’s policy direction continues or whether a new government could trigger changes or reversals.
That backdrop is likely to shape the Central Bank of Nigeria’s next decisions. CardinalStone expects the Monetary Policy Committee to leave rates unchanged at its next meeting and to maintain that hold stance for the rest of the year.
“We strongly believe that they will most likely hold rates, not just in next week’s meeting, but even in the rest of the meetings in the course of the year,” Owoeye said.
He said one reason is the central bank’s concern about election-related liquidity. Based on CardinalStone’s estimates, an additional 3 trillion naira to 5 trillion naira ($1.96 billion to $3.27 billion) could enter the system during the election period compared with more normal conditions.
Owoeye said the CBN is also likely monitoring the possibility that some of that liquidity may circulate outside the formal banking system, making it harder to track and manage. That risk, he said, strengthens the case for keeping policy tight even if inflation has recently begun to moderate.
Inflation, in CardinalStone’s view, remains too high for the central bank to sound fully comfortable. Owoeye said the firm expects inflation this year to come in below last year’s level, but still hover around 15% to 16%, above Nigeria’s long-run average and above the level policymakers would likely consider desirable.
That means the CBN is likely to stay hawkish in tone, even if it does not raise rates further. Owoeye said policymakers would want to see inflation fall more convincingly, particularly below its longer-run trend, before considering a shift in stance.
Global conditions could also keep the central bank cautious. Owoeye said international developments are outside the CBN’s control, but they remain important inputs into its forecasts and policy assessments.
On the domestic reform front, Owoeye said the key question is how quickly government policy can become more visible to households. He pointed to lower import costs on vehicles and machinery as one area that could support faster pass-through to consumers and manufacturers.
He said car prices were beginning to moderate and that food prices had also started easing, developments that could help Nigerians feel the benefits of macro stabilization more directly. But he said inflation relief alone would not be enough without stronger income growth.
According to Owoeye, only one or two Nigerian states are paying a minimum wage above 100,000 naira, while a small number are paying between 70,000 naira and 100,000 naira. Others, he said, remain below that range, limiting the extent to which households can absorb still-high living costs.
“Once the income level is matched up and then inflation comes down, people begin to feel the benefits,” he said.
For now, CardinalStone’s view is that Nigeria’s macro story remains on firmer footing than it was previously, but that resilience will be tested by imported inflation risks, politics and the still-slow translation of reforms into household relief. The next Monetary Policy Committee meeting will be the clearest near-term test of how policymakers balance those pressures.
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