Wednesday, September 24, 2025 - Nigeria’s central bank reduced its benchmark interest rate by 50 basis points to 27 per cent on Tuesday, ending a run of increases following an aggressive tightening cycle aimed at curbing inflation.
Governor Olayemi Cardoso said the Monetary Policy
Committee decision to lower the rate was based on the sustained disinflation
recorded in the past five months, projections of declining inflation for the
rest of 2025 and the need to support economic recovery efforts.
The benchmark interest rate, known as the Monetary Policy
Rate (MPR), is a key tool used by central banks to influence borrowing costs,
inflation, and overall economic activity.
The committee also reduced other key policy parameters,
including the asymmetric corridor around the MPR at +250/-250 basis points. It
reduced the Cash Reserve Ratio (CRR) for commercial banks to 45 per cent from
50 per cent and retained merchant banks at 16 per cent. The liquidity ratio was
also kept at 30 per cent.
The MPC also adjusted the standing facilities corridor to
improve the efficiency of the interbank market and strengthen monetary policy
transmission.
The committee further introduced a 75 percent CRR on non-TSA
public sector deposits for enhanced liquidity management considerations.
Members expressed satisfaction with the prevailing
macroeconomic stability, evidenced by the improvements in several indicators.
These include the slowdown in inflation, improved output
growth, stable exchange rate and robust external reserves.
It particularly noted the increased momentum of disinflation
in August 2025 being the highest in the past five months.
“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,”
he said.
Headline inflation eased to 20.12 per cent in August from
21.88 per cent in May, easing for the fifth straight month, helped by lower
energy prices and a steadier foreign exchange market.
Nigeria’s economy expanded by 4.23 per cent in the second
quarter, compared with 3.48 per cent, second quarter 2024 , supported by higher
oil production, stronger non-oil exports and lower imports.
The next policy meeting is set for 24 and 25 November
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