The Central Bank of Nigeria (CBN) has lowered its benchmark Monetary Policy Rate (MPR) for the first time in five years, easing it by 50 basis points to 27 percent.
The decision, announced after the Monetary Policy Committee (MPC) meeting in Abuja yesterday, reflects cautious optimism as inflation shows steady signs of easing, BusinessDay reported.
CBN Governor Olayemi Cardoso explained that the cut was based on five months of disinflation and projections of further declines in inflation for the remainder of 2025.
Don’t Miss This: Africa’s First Underground Tunnel Project to Begin in Lagos – SGOF
He cited stabilised exchange rates, falling petrol prices, seasonal food supply boosts, and rising capital inflows as major factors easing inflationary pressures.
To balance growth with liquidity control, the MPC reduced the Cash Reserve Requirement (CRR) for commercial banks to 45 percent, while retaining the 16 percent CRR for merchant banks.
However, it introduced a 75 percent CRR on non-Treasury Single Account (TSA) public sector deposits to mop up excess liquidity.
The Liquidity Ratio was held at 30 percent, and the Standing Facilities Corridor widened to ±250 basis points around the MPR.
“All 12 MPC members voted for the rate cut, signalling unity,” Cardoso said, stressing that the move aims to support economic recovery while safeguarding macroeconomic stability.
The decision coincides with improving fundamentals: GDP growth accelerated to 4.23 percent in Q2 2025, reserves rose to $43.05 billion by mid-September, and the naira stabilised on the back of stronger inflows and a $5.28 billion current account surplus.
Meanwhile, 14 Nigerian banks have met recapitalisation thresholds, strengthening the banking sector. The MPC urged reforms to sustain forex liquidity and attract further inflows.
Image Credit: BusinessDay
