By Benson Daniel
United Capital has projected that Nigeria’s interest rates will remain at elevated levels in the near term as persistent inflationary pressures continue to shape the country’s monetary policy outlook.
In its latest economic outlook, the investment and financial services firm said the Monetary Policy Committee of the Central Bank of Nigeria is expected to maintain a tight monetary stance to curb inflation and stabilise the economy. The firm noted that although inflation has shown signs of moderation in recent months, underlying price pressures remain significant.
According to the report, rising food prices, exchange rate fluctuations, energy costs and structural supply constraints continue to fuel inflation, limiting the scope for an immediate reduction in benchmark interest rates. It added that maintaining relatively high interest rates would help contain inflation expectations and support exchange rate stability.
United Capital observed that while higher borrowing costs may weigh on consumer spending and private sector investment, the policy remains necessary to restore macroeconomic stability and strengthen investor confidence. It said sustainable economic growth would depend on achieving a balance between inflation control and improved access to credit for businesses.
The firm also stated that the current monetary policy environment is likely to sustain attractive yields in the fixed income market, encouraging investors to maintain interest in government securities and other debt instruments. However, it cautioned that businesses dependent on bank financing could continue to face higher financing costs.
Analysts at United Capital further noted that fiscal reforms, increased domestic production and improvements in infrastructure would be critical in addressing the structural drivers of inflation. They argued that monetary policy alone cannot deliver lasting price stability without complementary government policies aimed at boosting productivity and reducing supply bottlenecks.
Market observers believe the Central Bank will continue to closely monitor inflation trends, exchange rate movements and global economic developments before considering any adjustment to interest rates. They said policymakers are likely to prioritise price stability while supporting measures that encourage long term economic growth.
The outlook comes as businesses and investors continue to assess the implications of Nigeria’s high interest rate environment on investment decisions, borrowing costs and overall economic performance.
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