CBN cuts interest rate to 23% but NESG says production reforms needed to lower prices

The Central Bank of Nigeria reduced its benchmark interest rate from 26.5% to 23% in September 2026, aiming to ease borrowing costs and moderate demand-driven inflation. Speaking on Channels Television, NESG's Acting Head of Research Faith Iyoha acknowledged the cut but argued monetary policy alone cannot solve Nigeria's inflation crisis, stating it 'cannot drive productivity' or address structural supply-side challenges.

Iyoha emphasized that lasting price relief requires reducing production costs through reforms targeting insecurity, inadequate infrastructure, and low productivity—factors she said directly increase business expenses and deter investment. She stressed the government must move beyond demand management to implement policies that boost domestic production of goods everyday Nigerians purchase, noting 'durable anti-inflation policy' depends on producing more at lower costs.

While lower rates may help businesses access cheaper credit, the NESG warns this won't translate to lower market prices without concurrent supply-side improvements. With households still contending with high prices, the focus should shift to whether inflation statistics reflect real relief for ordinary Nigerians.

Will you adjust your household budget expecting continued high prices despite lower borrowing costs, or look for ways to increase your income to cope with persistent cost-of-living pressures?

SOURCE: https://www.channelstv.com/2026/10/16/nesg-urges-fg-to-cut-production-cost-to-tackle-inflation/