Nigeria may be preparing to cut interest rates for the first time since September 2020 as cooling inflation and rising investor confidence open the door for a policy shift, Central Bank governor Olayemi Cardoso said on Saturday.
Speaking at the Eurocham Nigeria C-Level Forum in Lagos, Cardoso noted that the economy was entering a phase of renewed stability, supported by banking reforms, stronger capital inflows, and improved macroeconomic fundamentals.
“There is substantial potential for interest rates to decrease in the future as inflation continues to decline and as markets become more efficient in allocating capital,” he said to participants during a discussion with Andreas Voss, chief country representative of Deutsche Bank.
“That is the environment in which stronger corporate lending and higher levels of investment will naturally follow.”
Such a move would mark a break from the apex bank’s long tightening cycle and comes ahead of the Monetary Policy Committee’s (MPC) next meeting on September 23–24. The CBN last cut rates in September 2020 to 11.5% from 12.5% in July.
Nigeria’s inflation rate, while still elevated, has eased steadily for four consecutive months. The National Bureau of Statistics reported consumer prices rose to 21.88% in July, down from 22.22% in June and well below the 28-year peak of 34.8% reached in December 2024.
Last year, the regulator raised its policy rate six times to 27.5% in an aggressive bid to curb inflation. So far in 2025, the MPC has held rates steady across three consecutive meetings, even as disinflation gained momentum.
Analysts say the trend reflects the combined effect of tight monetary policy, exchange-rate stabilisation measures, and cautious fiscal management.
Cardoso said the bank would defend those gains “with the utmost zeal” while pressing ahead with a recapitalisation programme requiring lenders to raise fresh buffers by March 2026.
The process, he noted, is “making good progress” and will produce stronger, shock-resilient institutions able to finance long-term growth.
As of July 31, eight banks had already met the new capital thresholds, with others working to do so before the deadline.
To anchor these reforms, the CBN boss called for stronger alignment between fiscal and monetary authorities. “Improved collaboration between monetary and fiscal policymakers is critical to sustaining macroeconomic gains,” he said.
Positioning Nigeria as a gateway to West Africa, Cardoso added: “Nigeria is a market that is both large and appealing in its own right, and it is also situated at the entrance to the broader continent and West Africa.”
Yann Gilbert, Eurocham President, reaffirmed European investors’ commitment to Nigeria and described the chamber as a platform for deeper dialogue with policymakers.
