CBN Poised for First Rate Cut in Five Years as Inflation Cools, Naira Stabilises

The Central Bank of Nigeria (CBN) may cut interest rates for the first time in five years as easing inflation and a stronger naira create room for monetary policy adjustments.

The naira closed at ₦1,495.25 per dollar on Monday, breaking below the ₦1,500 psychological threshold for the first time since February.

The currency has been supported by higher oil export earnings, steady foreign inflows, and investor demand for high-yield debt instruments.

Nigeria recorded a current account surplus of $4.98 billion in the first half of 2025, according to the National Bureau of Statistics. Crude oil and other petroleum exports accounted for 87 per cent of foreign earnings during the period, boosting reserves to their highest level since November 2021.

Analysts say the combined effect of improved foreign exchange liquidity and declining inflation may push the CBN to lower its benchmark rate from 27.5 per cent at its September 23 meeting.

Charlie Robertson, head of macro strategy at FIM Partners, noted that high nominal yields and a current-account surplus have positioned Nigeria as an attractive destination for global portfolio investors.

Similarly, Mark Bohlund, senior credit analyst at REDD Intelligence, said the CBN is likely to pursue gradual easing to sustain yield differentials in favour of naira assets.

Nigeria’s local bonds have delivered 26.7 per cent returns this year, the strongest performance since at least 2020 and more than double the broader emerging market benchmark.

Analysts argue that while gradual rate cuts could support domestic growth, maintaining strong capital inflows will remain essential to stabilising the naira and sustaining macroeconomic confidence.