CBN Governor Signals Potential Drop in Lending Rates as Inflation Eases

Cardoso made the remarks during a fireside chat at the European Business Chamber (Eurocham Nigeria) C-Level Forum held in Lagos on Saturday. A statement released by the CBN on Sunday reaffirmed the bank’s commitment to maintaining macroeconomic stability, strengthening the banking sector, and positioning Nigeria as a leading investment destination.
According to the CBN Governor, while headline inflation remains elevated, it has started to slow, creating the potential for lower lending rates once price stability is further cemented.
“There is substantial potential for interest rates to decline as inflation moderates and markets improve in their capital allocation efficiency,” the statement quoted Cardoso as saying. He added, “This is the environment where stronger corporate lending and increased investment will naturally follow.”
Acknowledging the impact of high lending rates on businesses, Cardoso emphasized that the bank’s priority has been to restore confidence and bolster the resilience of the financial system.
“We are committed to protecting the stability recently re-established in the financial sector with utmost zeal,” he said. “Our goal is to maintain this stability while tackling inflation and ensuring the financial system supports corporate lending and investment.”
The Governor also highlighted progress in the ongoing bank recapitalization exercise, describing it as vital to safeguarding the financial system. He noted that the new minimum capital requirements would produce stronger institutions capable of withstanding shocks and fueling broader economic growth.
Cardoso underscored the importance of technology-driven solutions and deeper financial inclusion, stressing that expanding access to fintech platforms and fostering innovation are crucial to addressing poverty and closing financing gaps.
He further pointed to improved coordination between the CBN and fiscal authorities as a positive development, noting collaboration with the Ministries of Finance, Trade and Industry, and the Budget Office as key to sustaining reforms and achieving long-term stability.
On Nigeria’s role in the global economy, the Governor highlighted the country’s large market size and strategic location as assets that position it uniquely within West Africa and beyond.
“The urgency of managing our affairs effectively is underscored by ongoing geopolitical changes,” he remarked.
The statement added, “Nigeria’s market is both substantial and attractive, serving as a gateway to the broader continent and West Africa, which highlights the critical need for domestic stability.”
Eurocham President Yann Gilbert praised the forum as a vital platform for dialogue between European businesses and Nigerian policymakers. He noted the chamber’s commitment to long-term partnerships focused on job creation and sustainable investment.
The CBN raised its benchmark Monetary Policy Rate (MPR) six times in 2024, pushing it from 18.75% at the start of the year to a record-high 27.50% by December. This aggressive tightening aimed to curb runaway inflation and stabilize the naira amid persistent pressures.
The series of hikes represented the steepest monetary tightening in recent Nigerian history, with each rate increase accompanied by statements emphasizing the bank’s resolve to restore price stability and bolster investor confidence.
However, in 2025, the CBN has maintained a pause in the tightening cycle, holding the MPR steady at 27.50% in its meetings in February, May, and July.
Recent data from the CBN’s June 2025 Business Expectations Survey, which surveyed 1,900 firms across agriculture, services, and industry, revealed that high interest rates remain the most significant constraint on business operations—surpassing challenges such as insecurity and inadequate power supply.
The survey’s constraint index scored high interest rates at 75.6, followed by insecurity at 75.2 and insufficient electricity at 74.3.
Dr. Chinyere Almona, Director-General of the Lagos Chamber of Commerce and Industry, earlier warned that maintaining the MPR at 27.5% continues to weigh heavily on businesses.
“We must emphasize that the 27.5% interest rate remains a significant burden. We look forward to a reduction in the Monetary Policy Rate,” Almona stated.
The next Monetary Policy Committee meeting is scheduled for September 22-23, 2025. Market observers are closely watching for indications on whether the CBN will continue its pause or begin easing policy in line with the easing inflation.