Nigeria cuts lending rate for first time in five years

Nigeria’s central bank cut its main lending rate for the first time in five years, following the easing of inflation that had driven repeated hikes from early 2024.

The bank cut the benchmark rate by 50 basis points to 27% this week, citing “sustained disinflation, improved output growth, stable exchange rate and robust external reserves.” Nigeria’s inflation rate fell to 20.12% in August, the fifth consecutive decline this year. The bank also based the rate cut on its expectation that inflation will continue to slow for the rest of 2025, though it said it was monitoring “the risk posed by excess liquidity” from government spending.

Nigeria’s economy grew by 4.23% year-on-year in the second quarter, according to government data also released this week. Its rate cut comes as part of a wider easing of monetary policy across many of Africa’s biggest economies: central banks in Ghana, Egypt, and South Africa have taken similar steps, with cooling inflation cited in each case.

By Alexander Onukwue, SEMAFOR