Abuja, Nigeria | September 24, 2025
The Central Bank of Nigeria (CBN) has reduced its benchmark interest rate for the first time in five years, marking a cautious shift in monetary policy after a prolonged period of tightening.
At the conclusion of its Monetary Policy Committee meeting on Tuesday in Abuja, the apex bank announced a cut of 50 basis points, lowering the Monetary Policy Rate (MPR) from 27.5 percent to 27 percent.
The bank also adjusted key policy tools, reducing the Cash Reserve Ratio (CRR) for commercial banks from 50 percent to 45 percent, while retaining the liquidity ratio at 30 percent.
In addition, a 75 percent CRR was introduced on non-TSA public sector deposits, a move aimed at strengthening liquidity control.
CBN Governor Olayemi Cardoso explained that the decision followed five consecutive months of disinflation, with headline inflation easing to 20.12 percent in August.
He noted that the rate cut was designed to sustain the downward inflation trend while supporting growth momentum.
Nigeria’s economy grew by 4.23 percent year-on-year in the second quarter of 2025, bolstered by improvements in foreign reserves and relative stability in the exchange rate.
Economists, however, caution that the impact of the rate cut will depend on how quickly commercial banks transmit the lower policy rate to borrowers, while risks linked to fiscal pressures and liquidity management remain in focus.
This marks the first easing of monetary policy by the CBN since the COVID-19 era, signaling a measured step toward supporting households and businesses amid signs of economic recovery.
