Interest Rates Are Staying at 27%: Here’s What That Means for Your Money

If you’ve been waiting for interest rates to drop so loans get cheaper, we have news, and it’s not what you want to hear.

Last week, the Central Bank of Nigeria (CBN) announced it’s keeping the benchmark interest rate at 27%. No cuts. No relief. Just more of the same high-rate environment we’ve been living in since 2024.

For many Nigerians, this feels frustrating. Borrowing is expensive. Business loans are crushing. Even personal loans feel out of reach.

But here’s the thing: the CBN isn’t being stubborn for no reason. When you look at what’s actually happening in the economy, the decision starts to make sense, even if it’s painful.

Let’s break down what’s really going on, why the CBN made this call, and most importantly, what you should do with your money right now.

Why Didn’t They Cut Rates?

Governor Yemi Cardoso said the CBN is holding rates because the progress we’ve made on inflation is still fragile.

Think of it like this: if you’ve been sick and you’re finally starting to feel better, you don’t stop taking your medicine halfway through. You finish the course. That’s what the CBN is doing with high interest rates.

Here’s what’s improving:

• Inflation is slowing down
• Food prices are easing
• The naira has been more stable

But the CBN doesn’t trust that these improvements will last. They’re worried that if they cut rates too soon, inflation could come roaring back, and all the pain of the last year would be for nothing.

So they’re choosing to be patient, even if that means keeping borrowing costs high for now.

The Big Problem: Nigeria Has Too Much Cash Floating Around

Here’s the issue the CBN is really wrestling with: there’s ₦117 trillion in the economy right now, and that’s way too much money.

You might be thinking, “Wait, too much money? That sounds like a good thing!”

Not quite. Here’s why:

Imagine there are only 10 loaves of bread in your neighbourhood, but everyone suddenly has twice as much money. What happens? Sellers raise prices because they know people can pay more. That’s inflation.

Nigeria’s money supply exploded because of three things:

All this excess money is why prices are still high, even with interest rates at 27%. The CBN knows that cutting rates now would be like pouring more water into an already overflowing bucket.

High Interest Rates Are Holding the Naira Steady

Another reason the CBN isn’t cutting rates? The naira’s recent stability depends on it.

Right now, one of the main things keeping the naira from crashing again is that Nigerian government bonds and Treasury bills are paying around 22% returns. That’s attractive to investors, and it keeps money flowing into Nigeria instead of leaving.

If the CBN cuts rates, those returns drop. Investors might pull their money out. And the naira could weaken again.

The CBN isn’t ready to take that risk, not when the currency is only just starting to stabilise.

What This Means for You If You Need to Borrow Money

Let’s be honest: loans will stay expensive through most of 2025, and probably into early 2026.

Whether you’re thinking about a personal loan, a business loan, or even a mortgage, the interest rate environment isn’t getting friendlier anytime soon.

The CBN is waiting for three things before it’ll even consider cutting rates:

• Excess cash in the economy needs to drain out
• The naira needs to stay stable for longer
• Inflation needs to keep falling consistently

Until all three happen, rates stay high.

So what should you do?

• Avoid taking on new debt unless it’s absolutely necessary
• If you must borrow, compare options carefully and negotiate the best rate you can
• Prioritise paying down any existing debt, especially if it has a variable interest rate

The Bright Side: This Is a Great Time to Save and Invest

Here’s the flip side: if you have money to save or invest, this is actually one of the best environments in years.

High interest rates mean:

Treasury bills and government bonds are paying great returns, some around 22%

Fixed-income mutual funds are performing well because they invest in these high-yield instruments

Your emergency fund can actually grow if you keep it in the right place

If you’ve been sitting on cash in a regular savings account earning next to nothing, now is the time to move it into better options.

On Cowrywise, you can invest in:

• Treasury Bills:- short-term, low-risk, currently offering strong returns
• Fixed Income Funds:- managed funds that invest in government bonds and corporate debt

Both options let you take advantage of high rates while keeping your money relatively safe.

What You Should Do Right Now

Here’s your action plan based on where you are financially:

If you’re planning to borrow money:

• Hold off if you can. Rates will stay high for at least the next 6-9 months
• If it’s urgent, shop around aggressively for the best rate and smallest loan you can manage
• Avoid variable-rate loans; they’ll get even more expensive if the CBN changes other policies

If you have savings sitting idle:

• Move it into Treasury Bills or fixed income funds. Don’t let it sit in a regular account earning 3-5% when you could be earning 18-22%
• Build your emergency fund now while returns are strong,  aim for 3-6 months of expenses

If you’re carrying debt:

• Prioritise paying it down, especially if it’s high-interest or variable-rate debt
• Refinance if possible; some lenders may offer better terms if your credit profile has improved

If you’re investing for the long term:

• Don’t put all your money in one place. Mix short-term (Treasury Bills), medium-term (bonds), and long-term (stocks/funds) investments
• Stay patient. This high-rate period won’t last forever, but trying to time it perfectly is risky

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When Will Rates Actually Come Down?

The honest answer? Probably not until 2026.

The CBN will only cut rates when:

• Inflation stays below 32% for several months in a row
• The money supply starts shrinking
• The naira stays stable without needing artificial support

The earliest realistic window for a rate cut is Q1 2026, and even that depends on everything going according to plan.

So if you’re making financial decisions right now, plan as if rates will stay high through the end of 2025. If they drop sooner, that’s a bonus. But don’t bet your financial stability on it.

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The Bottom Line

We know 27% interest rates feel punishing, especially if you’re trying to grow a business or make a big purchase.

But the CBN is playing the long game. They’re choosing short-term pain to avoid long-term chaos, because cutting rates too soon could send inflation spiralling again, and that would hurt everyone even more.

So what’s the smartest move?

• Avoid expensive debt
• Take advantage of high yields while they last
• Build a financial cushion now, while returns are strong
• Stay patient, this won’t last forever

At Cowrywise, we’re here to help you navigate this environment. Whether you’re looking to grow your savings, protect your money in low-risk funds, or just plan smarter, we’ve got you covered

Because even when rates are high, your money can still work hard for you.