The Governor of the Central Bank of Nigeria (CBN), Mr Olayemi Cardoso, has hinted that lending rates may fall in the coming months as inflation shows signs of easing.
He gave the assurance during a fireside chat at the European Business Chamber (Eurocham Nigeria) C-Level Forum in Lagos on Saturday.
A statement by the CBN on Sunday reiterated the bank’s commitment to macroeconomic stability, a stronger banking sector, and positioning Nigeria as a top destination for investment.
According to Cardoso, headline inflation, though still high, is slowing, creating a possibility for reduced lending rates once price stability is further consolidated.
“There is a 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.
“That is the environment in which stronger corporate lending and higher levels of investment will naturally follow,” he added.
He acknowledged that high lending rates have weighed on businesses but stressed that the CBN’s priority has been restoring confidence and building a resilient financial system.
“We will protect the stability that has been re-established in the financial system with the utmost zeal. Our primary objective is to maintain that stability while simultaneously addressing inflation and ensuring that the financial system is sufficiently resilient to facilitate corporate lending and investment,” Cardoso said.
Bank Recapitalisation and Financial Inclusion
The Governor highlighted the ongoing bank recapitalisation exercise as critical for safeguarding the financial system.
He explained that new minimum capital requirements will create stronger institutions capable of withstanding shocks and financing broader economic growth.
Cardoso also stressed technology-driven solutions and deepening financial inclusion as key priorities.
“Expanding access to fintech platforms and supporting innovation will play a central role in tackling poverty and bridging financing gaps,” he noted.
He pointed to improved coordination with fiscal authorities, describing collaboration with the Ministry of Finance, Ministry of Trade and Industry, and the Budget Office as essential for sustaining reforms and long-term stability.
Cardoso remarked that Nigeria’s size and strategic location give it a unique role in West Africa and beyond.
“The urgency of addressing our own affairs is underscored by the ongoing geopolitical changes,” he said.
“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. This underscores the importance of maintaining stability at home.”
Eurocham President Yann Gilbert praised the forum as a platform for dialogue between European businesses and Nigerian policymakers.
“Our members are committed to long-term partnerships in Nigeria, focusing on job creation and sustainable investment,” he said.
Monetary Policy and Business Impact
The CBN raised its benchmark lending rate six times in 2024, taking the Monetary Policy Rate (MPR) from 18.75% at the start of the year to 27.50% by December.
The aggressive tightening aimed to curb runaway inflation and stabilise the naira. The hikes represented the steepest monetary tightening in recent history.
In 2025, the CBN has paused the tightening cycle, holding the MPR at 27.50% through its February, May, and July meetings.
A June 2025 Business Expectations Survey, polling 1,900 firms, ranked high interest rates as the top constraint on businesses, overtaking insecurity and poor electricity supply.
“High interest rates scored 75.6 on the constraint index, followed by insecurity at 75.2 and insufficient power supply at 74.3,” the report showed.
Dr Chinyere Almona, Director-General of the Lagos Chamber of Commerce and Industry, warned that the high MPR remains a heavy burden.
“We must restate that the interest rate at 27.5 per cent remains a depressing burden on businesses. We therefore desire to see a reduction in the Monetary Policy Rate,” she said.
The next Monetary Policy Committee meeting is scheduled for September 22 and 23, 2025. Market watchers are closely monitoring it for signs of potential easing as inflation continues to ease.
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