The Central Bank of Nigeria (CBN) has signalled that interest rates may ease in the coming months, even as concerns grow over political pressures that could upset economic stability.
Governor Olayemi Cardoso, speaking at the European Business Chamber (Eurocham Nigeria) C-Level Forum in Lagos, said current lending rates of 32 to 36 percent are unsustainable for businesses.
“There is a substantial potential for interest rates to decrease in the future,” he told participants during a fireside chat moderated by Andreas Voss, Chief Country Representative of Deutsche Bank Nigeria.
Cardoso stressed that the apex bank’s immediate priority remains to safeguard stability and consolidate reforms. “It is decreasing as a consequence of collective efforts. It is anticipated that the advantages of the CBN tightening posture will persist. We will protect the stability that has been re-established in the financial system with the utmost zeal,” he added.
Figures released by the National Bureau of Statistics (NBS) last month showed headline inflation eased to 21.88 percent in July 2025, down from 22.22 percent in June. On a year-on-year basis, the rate fell by more than 11 percentage points from the 33.40 percent recorded in July 2024.
Urban inflation also dropped to 22.01 percent, compared with 35.77 percent a year earlier. While analysts say the trend is encouraging, they caution that it may be too early for policy relaxation.
Economic analyst and CEO of SPM Professionals, Dr Paul Alaje, warned that inflationary pressure remains fragile. “I think the central bank is making some very good policy. This time, I only hope that some of those policies will be sustained. For instance, relaxing MPR shouldn’t be now,” he said on Channels Television.
Alaje noted that a full cycle of consistent inflation data is needed before cutting rates. “Some of the inflation numbers we are seeing are outliers. I didn’t say they are lies. I’m saying they are outliers,” he explained.
Alaje also flagged political behaviour ahead of the 2027 elections as a major risk. “Even the danger starts more with the pre-election year. The behaviour of politicians will determine whether we are going to have another great four years or another horrible four years. And this is what I want President Tinubu to do. Warn politicians, all inclusive, from federal to local government, no exchange of foreign currency, to delegate or for whatever,” he said.
He stressed that reckless handling of foreign exchange during campaigns could erase recent gains, given that 80 percent of Nigeria’s final goods are imported. “The little sign of positivity that we are seeing will evaporate overnight,” he warned.
Small and medium-sized businesses continue to struggle under prevailing credit conditions. With loan rates above 30 percent, many firms say borrowing is out of reach, forcing them to delay expansion or cut jobs.
Cardoso’s assurance of “downward pressure” on rates is being closely monitored by entrepreneurs who see affordable credit as vital to recovery.
