The Central Bank of Nigeria (CBN) has explained the reason for continued high interest rates, stating that its monetary policy stance is not only aimed at curbing inflation but also at restoring economic credibility, rebuilding investor confidence, and defending the value of the naira.
CBN Governor Olayemi Cardoso made this known on Monday at the Nigeria Domestic Investment Summit, themed *Operationalising Nigeria’s First Policy*, organised by the Ministry of Industry, Trade and Investment in Abuja.
Speaking ahead of the bank’s upcoming decision on the Monetary Policy Rate (MPR) scheduled for Tuesday, Cardoso, represented by the CBN’s Director of Risk Management, Blaise Ijebor, acknowledged that elevated interest rates pose challenges—particularly for businesses and the real sector—but maintained that the policy is a necessary step towards stabilising the macroeconomic environment.
“High interest rates are painful. We all know that. We all recognise that, especially for the real sector. But interest rates are not just about affordability, they are also about credibility,” Cardoso said.
According to him, the current monetary policy stance sends “a strong signal that Nigeria is serious about defending the value of its currency, restoring macroeconomic balance, and regaining investors’ confidence.”
The CBN Governor said the bank had no choice but to “return to fundamentals” after taking over an economy plagued by policy distortions, opaque forex markets, and evaporating investor confidence.
“Eighteen months ago, our financial markets were in disarray. The foreign exchange system was broken. There was policy opacity and severe investor apathy.
“Our immediate task as a Central Bank was to arrest the slide and restore discipline. And that meant bold reforms, not technical tweaks, starting with exchange rate unification, phasing out unsustainable interventions, and returning to a transparent market framework”, Cardoso added.
He added that monetary tightening, though painful in the short term, had yielded results in the form of increased investor confidence, improved reserves, and a more coherent policy environment.
“But while we defend stability with one hand, we are using the other hand to build inclusivity. We are improving access to finance, modernising payment infrastructure, streamlining regulation, and setting the stage for banks to better support businesses. That’s the spirit behind the recapitalisation programme”, he stated.
Speaking further, Cardoso commended domestic investors for their resilience through years of volatility, policy uncertainty, and inflation shocks.
He urged investors to see the forum not just as a “talk show” but a space to co-create solutions based on lived experiences.
“You all stayed the course. You continued to bet on Nigeria. That kind of patriotism is not just admirable, it is the foundation on which any credible recovery must be built.
“Your insights, challenges, innovations, and practical suggestions are critical to shaping a financial system that works for, with, and on your behalf, not against you”, he said.