CBN Headquarters in Abuja

Intro / Lead Paragraph

Nigeria’s Central Bank has reduced its benchmark interest rate by 50 basis points to 27 per cent, ending a prolonged tightening cycle aimed at curbing inflation. The decision reflects five straight months of disinflation and projections of further declines in inflation through the rest of 2025.

Main Article

The Central Bank of Nigeria (CBN) on Tuesday lowered its Monetary Policy Rate (MPR) from 27.5 per cent to 27 per cent, citing a sustained slowdown in inflation and the need to support economic recovery efforts.

Governor Olayemi Cardoso said the Monetary Policy Committee (MPC) reached the decision after observing a consistent downward trend in inflation, coupled with stable exchange rates, increased capital inflows and a surplus current account balance.

“This deceleration underpinned by monetary policy tightening, exchange rate stability, increased capital inflows and surplus current account balance have helped to broadly anchor inflation expectations,” Mr. Cardoso said.

Alongside the rate cut, the MPC adjusted several key policy levers:

• Cash Reserve Ratio (CRR): Reduced for commercial banks to 45 per cent from 50 per cent, retained at 16 per cent for merchant banks.
• Liquidity Ratio: Maintained at 30 per cent.
• Asymmetric Corridor: Around the MPR kept at +250/-250 basis points.
• Standing Facilities Corridor: Adjusted to improve interbank market efficiency and strengthen monetary policy transmission.
• CRR on Non-TSA Public Sector Deposits: Introduced at 75 per cent for enhanced liquidity management.

The committee noted broad macroeconomic stability evidenced by:

• Headline inflation easing to 20.12 per cent in August from 21.88 per cent in May – the fifth consecutive month of decline, driven by lower energy prices and steadier foreign exchange markets.
• Nigeria’s economy expanding by 4.23 per cent in the second quarter of 2025, up from 3.48 per cent a year earlier, supported by higher oil production, stronger non-oil exports and lower imports.