Nigeria’s Central Bank Signals Cautious Approach to Interest-Rate Easing

Governor Olayemi Cardoso told investors on July 16 that, although Nigeria has recorded a gradual slowdown in inflation, the central bank is not in a hurry to begin cutting rates. He emphasized that the Monetary Policy Committee will stay “guided strictly by data rather than market sentiment,” and that the next policy meeting is scheduled for July 20-21. The governor’s comments come after months of market speculation that a rate-cut cycle might be imminent.

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Cardoso highlighted “11 months of continuous disinflation,” indicating that the tightening campaign launched in 2022 is producing the intended effect. However, he warned that geopolitical developments—specifically the conflict involving Iran—have disrupted the inflation trajectory. He noted that without these shocks, the bank had projected “going into next year inflation would have been down to very moderate levels.” Early implementation of economic reforms, he said, has given Nigeria “resilience” to absorb such external pressures.

Reuters

In his remarks at the BusinessDay conference in Lagos, Cardoso defended the decision to keep policy rates unchanged at the last meeting, despite market expectations of a pivot. He argued that the central bank “saw things that most other people didn’t see,” suggesting a broader risk assessment beyond headline figures. The governor also credited the timing of reforms, stating that undertaking them “a lot earlier” helped the economy withstand recent global shocks.

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• “There were 11 months of continuous disinflation,” — Olayemi Cardoso, Governor, Central Bank of Nigeria

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• “over a period of time, we would expect interest rates to begin to moderate.” — Olayemi Cardoso

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• “If not for the fact ?that we had this, we had projected that going into next year inflation would have been down to very moderate levels.” — Olayemi Cardoso

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• “We didn't cut, and believe me, we saw things that most other people didn't see.” — Olayemi Cardoso

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• “One of the reasons for that is the fact that we had undertaken the reforms a lot earlier,” — Olayemi Cardoso

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