CBN Signals Possible Rate Cuts as Inflation Shows Signs of Easing
The Central Bank of Nigeria (CBN) has indicated that lower interest rates may be on the horizon as inflationary pressures begin to moderate, raising prospects for cheaper credit and renewed private sector investment.
Speaking at the European Business Chamber (Eurocham Nigeria) C-Level Forum in Lagos on Saturday, CBN Governor Olayemi Cardoso reaffirmed the Bank’s commitment to macroeconomic stability, banking sector resilience, and positioning Nigeria as a leading destination for global investment.
Inflation Trends and Policy Outlook
Nigeria’s inflation, while still elevated, has shown early signs of easing in recent months. Cardoso noted that the pace of moderation could provide room for monetary policy adjustment, stating that “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.”
The CBN’s monetary policy has been at its tightest in decades, with the benchmark rate raised six times in 2024 from 18.75% to 27.50% in an aggressive bid to curb inflation. Thus far in 2025, the rate has remained unchanged across the February, May, and July meetings of the Monetary Policy Committee (MPC).
The upcoming MPC meeting scheduled for September 22–23, 2025, is widely expected to provide clearer guidance on whether the Bank will maintain its pause or begin easing policy.
Business and Real Estate Implications
High interest rates remain the biggest constraint for Nigerian businesses. Borrowing costs are now considered a more severe challenge than insecurity and power shortages. The Lagos Chamber of Commerce and Industry has also cautioned that keeping rates at 27.5% continues to stifle business activity and discourage investment.
For real estate, this dynamic has been particularly significant. In a recent Nigeria Housing Market analysis, it was noted that while cooling inflation improves affordability in nominal terms, persistently high interest rates raise the cost of capital for developers and constrain mortgage penetration, which remains at just 5%.
The analysis highlighted that residential demand in the affordable and middle-income segments remains resilient, but financing costs limit the elasticity of supply. Commercial developers, meanwhile, have shifted toward capital-efficient models such as neighborhood malls and refurbishment projects rather than large-scale greenfield developments
Structural Reforms and Investment Climate
Cardoso acknowledged these pressures, stressing that the CBN’s focus is not only on tackling inflation but also on rebuilding confidence in the financial system. He pointed to the ongoing bank recapitalization exercise as a critical step toward creating stronger financial institutions capable of driving sustainable growth.
Beyond interest rates, the CBN governor underscored the importance of structural reforms, including deeper financial inclusion, fintech expansion, and technology-driven banking solutions. According to him, these initiatives are central to tackling poverty and closing financing gaps for small and medium-sized enterprises.
Cardoso also highlighted the growing synergy between monetary and fiscal authorities, citing closer coordination with the Ministries of Finance, Trade and Industry, and the Budget Office. He argued that such alignment is vital for improving capital allocation and creating a stable investment environment.
Eurocham Nigeria President Yann Gilbert welcomed the dialogue, describing the forum as an essential platform for European businesses to engage with Nigerian policymakers. He reaffirmed the long-term commitment of European investors to the Nigerian economy.
Outlook
The CBN’s policy stance over the coming months will be closely watched by both domestic and international investors. While inflation remains a critical concern, easing price pressures may finally provide the space for rate cuts, potentially lowering borrowing costs, unlocking credit flows, and stimulating private sector growth.
For the real estate sector, the September MPC meeting will be particularly consequential. As NHM’s earlier analysis underscored, the balance between falling inflation and elevated interest rates has already reshaped financing models, investment strategies, and delivery pipelines. A shift toward lower rates could ease these pressures, creating opportunities for developers, investors, and policymakers to accelerate housing delivery and capital
