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Nigeria economy has held up remarkably well in recent months despite drop in crude oil prices which constitute over 90 per cent of its forex earnings.
From the growth in Gross Domestic Product (GDP) numbers, drop in inflation rate, exchange rate stability, surge in external reserves to rise in capital inflows are strong points to show that the economy is pushing up.
Aminu Gwadabe, president, Association of Bureaux De Change Operators of Nigeria, said Nigeria’s monetary policy implementation has improved, and the resilience of economy strengthened in recent times.
“Findings showed that in the past, many economies were reluctant to let their exchange rates move freely. But with better-anchored inflation expectations and stricter macroprudential regulation, Nigeria has increasingly allowed the exchange rate to act as a shock absorber, and central bank shifted its focus toward stabilizing economic activity,” he said.
For him, by sustaining the reforms and stronger foundations, Nigeria can turn hard-won resilience into long-lasting stability and growth of the economy.
The monetary policy easing started last month with the Central Bank of Nigeria (CBN)-led Monetary Policy Committee cutting benchmark interest rate by 50 basis points from 27.5% to 27%, marking the first rate cut since the tightening cycle began five years ago.
The decision to cut rate was reached at the 302nd Monetary Policy Committee meeting, and reflects a shift towards supporting economic growth amid easing inflationary pressures.
The rate cut follows five consecutive months of slowing inflation, with projections indicating continued disinflation through the rest of 2025.
This policy easing signals the CBN’s confidence in a stabilizing macroeconomic environment while aiming to stimulate economic activity and is expected to ease borrowing costs, improve liquidity in the banking sector, and potentially support stronger consumer spending and investment growth.
Adeyemi Adeniran, Statistician-General of Nigeria and CEO of the National Bureau of Statistics (NBS), said the latest Consumer Price Index (CPI) report showed that headline inflation rate dropped from 21.88% in July to 20.12% in August.
“Headline inflation (year-on-year) moderated further to 20.12% in August 2025, from 21.88% in July, driven by the decline in both food and core inflation. Besides, the second quarter GDP report solidly puts growth within the quarter at 4.23%, representing a 4-year high of 4.23% in second quarter of the year’, up from 3.13% in first quarter,” he said.
The NBS report showed the growth was driven by appreciable improvements across the oil and non-oil sectors, with stability in the oil sector and expansions in agriculture, industries and services sectors cumulating in above average performance output.
According to the GDP breakdown, oil sector grew by 20.46% in second quarter 2025 as against 1.87% recorded in first quarter, riding on the back of double-digit growth in crude oil production.
Olayemi Cardoso, CBN governor, said monetary policy easing became necessary following a review of macroeconomic developments. According to him, the decision by the MPC to ease the policy stance was made in the light of improving inflation trends.
“The committee’s decision to lower the monetary policy rate was predicated on the sustained disinflation recorded in the past five months, projections of declining inflation for the rest of 2025 and the need to support economic recovery efforts,” Cardoso said.
Bukola Bankole, Partner & Corporate Finance Expert at TNP, said that by lowering the benchmark rate by 50 basis points to 27%, the MPC made a modest but symbolic move as it marks the first break from months of aggressive tightening. For businesses already borrowing at rates above 30% however, this adjustment will not ease financing costs immediately, but it signals recognition that growth cannot be perpetually stifled in the name of inflation control.
“For investors, Nigeria’s yield story remains unchanged because even after the cut, local instruments remain among the most attractive across frontier and emerging markets. So, a half point change does little to alter that. The real test is whether inflation starts to ease and whether the Naira can achieve meaningful stability”.
“As we all know, inflation in Nigeria is not demand-driven; it is cost-push, reflecting exchange rate volatility, the knock-on effects of subsidy removal, high energy costs, and food supply disruptions. So certainly, against this backdrop, further hikes would have been the wrong medicine,” she said.
“I will say this MPC decision reflects an effort to balance vigilance on inflation with the need to create space for credit expansion and investment. The real challenge however remains consistency, as without predictable policy, stronger fiscal alignment, and structural reforms that address the root causes of inflation, this cut will remain symbolic as with a lot of other actions previously taken”.
“If those elements are however in place, then this small cut could truly mark the beginning of a more sustainable policy mix that supports growth without abandoning the fight for price stability”.
Bismarck Rewane, managing director, Financial Derivatives Company Limited, said the remainder of 2025 appears poised for a stronger performance, with foreign currency inflows and stable commodity prices providing support.