Nigeria’s economic managers are expected to keep interest rates high and tighten liquidity in the coming months as they focus on reducing inflation and stabilising the naira.
This development will keep borrowing costs elevated for businesses and households, according to economic policy analyst Dr Felix Ijeh.
He said the Federal Government and the Central Bank of Nigeria (CBN) have made fighting inflation and protecting the naira their top priorities, even if it means making credit more expensive and limiting the amount of money circulating in the economy.
“The big picture right now is that Nigeria’s economic managers are focused on one main goal: bring down rising prices (inflation) and keep the naira stable, even if it means borrowing and spending money is more expensive for everyone,” Ijeh said.
According to him, the policy direction means loans and credit will remain costly, access to foreign exchange for imports will continue to be controlled, while households will still face high food and fuel prices.
One of the major policy moves, he said, is the CBN’s plan to issue about N5.8 trillion worth of Treasury bills between July and September 2026, including N2 trillion in July alone, the largest single-month issuance this year.
He explained that the move is aimed at reducing excess cash in circulation to slow inflation, but warned that it would also leave banks with less money to lend.
“The government is borrowing heavily to mop up cash from the economy,” he said.
According to Ijeh, while the strategy could help reduce inflationary pressures and offer better returns for savers through Treasury bills and money market investments, businesses and individuals seeking loans would continue to face high borrowing costs.
He also said the CBN is unlikely to reduce its benchmark interest rate of 26.5 per cent anytime soon because inflation remains high, particularly food inflation.
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“Cutting rates too early could make prices rise again,” he said.
Ijeh noted that the current environment favours savers, who can earn higher returns on deposits and other low-risk investments, but poses challenges for manufacturers, retailers, property developers and families that depend on bank loans.
He advised businesses to reduce their reliance on expensive bank credit, improve cash management and source more raw materials locally to reduce exposure to foreign exchange fluctuations.
On inflation, Ijeh said overall inflation remains around 15.9 per cent, while food prices continued to rise in June, reducing consumers’ purchasing power.
“Prices are still rising, especially for food,” he said, adding that households should plan their food budgets carefully, buy staple items in bulk when prices fall and reduce unnecessary spending.
He also advised manufacturers to negotiate fixed prices with suppliers where possible, while retailers should focus more on affordable everyday products and flexible pricing strategies to reduce losses.
Despite the difficult inflation environment, Ijeh said Nigeria’s external reserves have improved significantly to between $51 billion and $51.86 billion, the highest level in more than 15 years.
According to him, the stronger reserves have helped stabilise the naira, although access to foreign exchange remains subject to regulatory requirements.
“Nigeria has more foreign reserves, but dollars are still not easy to get,” he said.
He urged businesses that rely on imports to hedge their foreign exchange exposure through forward contracts, maintain modest dollar balances for urgent transactions where permitted and increase the use of locally sourced inputs.
Ijeh also pointed to the ongoing banking recapitalisation exercise, saying 33 banks have already met the new capital requirements by raising about N4.66 trillion.
While the stronger capital base would improve the stability of the banking system, he said lenders are becoming more cautious in extending credit.
“Banks are stronger, but lending rules are tighter,” he said.
According to him, businesses seeking loans should maintain proper financial records and explore alternative financing options, while households should improve their credit profiles and consider lower-cost mortgage schemes where available.
Summing up the current policy direction, Ijeh said the government’s strategy remains centred on fighting inflation, protecting the naira and strengthening the banking sector, even though the measures may keep borrowing costs high in the near term.
“The government’s plan is clear: fight inflation, protect the naira, and make banks stronger—even if it means loans stay expensive for a while,” he said.
He advised businesses and households to adopt a cautious financial approach by saving through safe, high-interest investment options, borrowing only when necessary, planning for further price increases, and reducing dependence on imported goods.
“In times like these, careful planning beats risky bets. Families and businesses that focus on stability—not quick gains—will come out stronger when the economy finally eases up,” he added.
Alex is a business journalist cum data enthusiast with the Pinnacle Daily. He can be reached via ealex@thepinnacleng.com, @ehime_alex on X