The Central Bank of Nigeria’s (CBN) Monetary Policy Committee (MPC) has reduced the Monetary Policy Rate (MPR) by 50 basis points, lowering it from 27.5 percent to 27 percent.
The decision was announced by CBN Governor, Olayemi Cardoso, during the post-MPC press briefing on Tuesday, following the Committee’s 302nd meeting in Abuja.
Alongside the MPR cut, the MPC narrowed the asymmetric corridor around the benchmark rate to +250 and -250 basis points, from the previous +500/-100 basis points.
This adjustment, according to the CBN, is intended to strengthen liquidity management and provide clearer signals to the financial markets.
Cardoso explained that the adjustment reflects the Committee’s cautious attempt to ease monetary conditions in response to signs of moderating inflation and improving macroeconomic fundamentals.
Other Policy Decisions
- Cash Reserve Ratio (CRR): The Committee retained CRR for commercial banks at 45 percent, while that of merchant banks was set at 16 percent.
- Liquidity Ratio: The ratio was maintained at 30 percent.
These measures, the CBN said, were carefully balanced to sustain ongoing disinflation efforts while ensuring the banking sector has adequate liquidity to support credit expansion and economic growth.
Basis for CBN’s decision
The MPC’s decisions come against the backdrop of fresh data from the National Bureau of Statistics (NBS), which showed that Nigeria’s inflation rate eased to 20.12 percent in August 2025, down from 21.88 percent in July.
Cardoso noted that while inflation remains elevated, recent declines suggest that previous rounds of monetary tightening are beginning to yield results. He stressed that the new measures would consolidate these gains without stifling economic growth.
Nigeria’s economy grew by 4.23 percent in real terms in the second quarter of 2025, driven by strong performance in both oil and non-oil sectors, according to NBS.
External reserves have also climbed close to $42 billion, providing additional buffers for monetary stability.
Analysts have earlier called on the CBN to adopt more flexible monetary policies that will stimulate credit flow into the economy, especially for small and medium enterprises (SMEs) and critical sectors.
The Centre for the Promotion of Private Enterprise (CPPE)’s Chief Executive Officer of CPPE, Dr. Muda Yusuf, in a statement, urged the CBN to “Calibrate CRR and MPR downward as inflation moderates to create a more enabling credit environment. Complement monetary tightening with supply-side measures to address structural inflation drivers.”
He stressed that the CBN’s current tight monetary posture, though aimed at curbing inflation, has inadvertently limited access to affordable credit for businesses and households.
