In a decision that will deepen the pain for Nigerian businesses already reeling from sky-high interest rates, the Central Bank of Nigeria (CBN) on Tuesday kept its benchmark Monetary Policy Rate locked at 27.00%—one of the highest in the world—and signalled it is in no rush to offer relief.
Governor Olayemi Cardoso defended the hawkish stance, insisting that the “medicine is working” even as manufacturers, real estate developers and small enterprises warn that loans priced above 30% are choking investment and forcing factory closures.
“Inflation is finally bending, FX liquidity is improving, and the naira is holding its ground. Now is not the time to ease the foot off the brake,” Cardoso told journalists after the Monetary Policy Committee meeting.
The CBN pointed to October’s headline inflation print of 16.05%—down nearly 2 percentage points in a single month—and a dramatic collapse in food inflation as proof that its aggressive tightening over the past 18 months is delivering results.
Yet for many borrowers, the victory feels hollow. Commercial bank lending rates are now routinely quoted between 32% and 38%, effectively freezing new credit to the real sector. Industry groups had openly lobbied for at least a 100-basis-point cut ahead of the festive season.
Instead, the MPC delivered only a minor technical tweak: narrowing the upper band of the interest-rate corridor to +50 basis points while widening the discount window to –450 bps, a move designed to mop up excess liquidity without pushing overnight rates even higher.
Key parameters left unchanged:
– MPR: 27.00%
– CRR (commercial banks): 45%
– Liquidity Ratio: 30%
Economists described the outcome as “no surprises, maximum caution.” Bismarck Rewane, CEO of Financial Derivatives Company, said the central bank is deliberately prolonging the high-rate environment to build a buffer against possible oil-price shocks and election-related spending pressures in 2026–2027.
“Cardoso wants inflation closer to single digits before he even thinks about cutting. That means businesses will have to survive another six to nine months of these punitive rates,” Rewane noted.
Market reaction was swift: the NGX Banking Index fell 1.8% in late trading as investors priced in a longer-than-expected period of squeezed margins and rising loan defaults.
For millions of entrepreneurs paying 35%+ on overdrafts, the message from Africa’s largest central bank was unambiguous tonight: endure the pain a little longer—macro stability comes first.
