CBN Signals Possible Rate Cuts in 2026 as Disinflation Gains Momentum
CBN Signals Possible Rate Cuts in 2026 as Inflation Falls and Investor Confidence Rises
The Central Bank of Nigeria (CBN) has indicated that monetary easing may resume in 2026, as sustained moderation in inflation strengthens the case for a shift in policy direction. Governor Olayemi Cardoso disclosed the annual Bankers’ Dinner in Lagos, outlining key priorities that will define the apex bank’s strategy in the year ahead.
Nigeria’s inflation rate declined to 16.05% in October 2025, a significant improvement from 33.88% recorded in the same month of the previous year, according to data from the National Bureau of Statistics. Month-on-month inflation also eased to 18.02% in September and continued to fall in October. Food inflation, which has posed the greatest pressure on household welfare, dropped to 13.12% compared with 39.16% in October 2024.
Cardoso stated that the CBN’s internal models project continued disinflation through 2026, supported by stronger domestic production, improved foreign-exchange liquidity, and tighter liquidity management.
“As inflation becomes firmly anchored, policy rates will be calibrated in line with evolving data,” he noted, signalling that the period of aggressive monetary tightening may be approaching a turning point.
Strengthening Financial Stability Remains Central
The governor reiterated that 2026 will focus on reinforcing the resilience of Nigeria’s financial system. The agenda includes stricter supervisory regimes, enhanced corporate governance standards, and reforms aimed at ensuring sustainable credit expansion across the banking sector.
Cardoso emphasised that the protection of depositors remains an uncompromising priority. He added that the CBN will continue to deliver durable price stability, supported by a more refined inflation-targeting framework built on advanced data analytics.
Advancing Payments Modernisation and Financial Inclusion
Nigeria’s payments landscape continued to deepen in 2025, driven by a surge in digital-finance adoption. Cardoso highlighted that more than 12 million contactless payment cards are now in circulation, reflecting stronger consumer confidence in digital payment channels.
Earlier in the year, the CBN extended its Payment System Vision roadmap to 2028, accelerating efforts to upgrade payments infrastructure and strengthen cybersecurity. The apex bank’s regulatory sandbox has also expanded to include over 40 fintech innovators, enabling controlled experimentation and responsible scaling of digital-finance solutions.
According to Cardoso, the CBN will maintain support for fintech growth but will prioritise consumer protection, cybersecurity, stronger data-governance frameworks, and clear guardrails for digital-asset experimentation going forward.
Foreign Capital Inflows Rebound Sharply
Nigeria recorded a decisive improvement in external-sector performance in 2025. Foreign capital inflows rose to $20.98 billion between January and October, a 70% increase over total inflows in 2024 and a 428% rise from $3.9 billion in 2023. Cardoso described this as evidence of renewed investor confidence driven by policy consistency and exchange-rate reforms.
The current-account balance also strengthened significantly, increasing by more than 85% to $5.28 billion in the second quarter of 2025. Foreign-exchange reserves climbed to $46.7 billion by mid-November the highest level in almost seven years, providing over 10 months of import cover.
“Our FX reserves are being rebuilt organically through improved market functioning, stronger non-oil exports, and robust capital inflows,” Cardoso said.
Firm Stance on Fiscal Discipline
Cardoso reiterated that the CBN has ended the era of direct financing of government deficits, describing the decision as central to restoring credibility in monetary policy.
He noted that fiscal authorities are complementing this shift with wider institutional reforms, including the Revenue Optimisation Framework, the establishment of a National Revenue Agency, and enhancements to the Treasury Single Account, all aimed at improving revenue mobilisation and public financial management.
Outlook: A More Aligned Policy Environment
Cardoso said Nigeria is transitioning towards a full-fledged inflation-targeting regime, which requires stronger coordination between fiscal and monetary authorities. He added that this alignment will be critical for achieving sustainable price stability and strengthening macroeconomic confidence.
Looking ahead, the CBN intends to deepen engagement with domestic and international regulators, expand collaboration with financial-sector stakeholders, and continue promoting responsible innovation across the payments and fintech ecosystem.
