The Monetary Policy Committee of the Central Bank of Nigeria has reduced the country’s benchmark interest rate to 27.00 per cent, the first cut in 2025 after three consecutive pauses.
CBN Governor Olayemi Cardoso announced the decision at a press briefing on Tuesday in Abuja following the conclusion of the 302nd MPC meeting held on September 22 and 23. All 12 members of the committee were in attendance.
Cardoso said the committee decided to reduce the Monetary Policy Rate by 50 basis points, adjust the Standing Facilities corridor to +250/-250 basis points, raise the Cash Reserve Requirement for commercial banks to 45 per cent while retaining that of merchant banks at 16 per cent, and introduce a 75 per cent CRR on non-TSA public sector deposits. The Liquidity Ratio was left unchanged at 30 per cent.
“The Committee decided as follows: 1. Reduce the Monetary Policy Rate by 50 basis points to 27.00 per cent. 2. Adjust the Standing Facilities corridor around the MPR to +250/-250 basis points. 3. Adjust the CRR for commercial banks to 45 per cent while retaining that of merchant banks at 16 per cent. Introduce a 75 per cent CRR on non-TSA public sector deposits. 4. Keep the Liquidity Ratio unchanged at 30.00 per cent,” Cardoso said.
According to him, the rate cut was justified by “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 committee noted that headline inflation moderated to 20.12 per cent in August from 21.88 per cent in July, while food inflation dropped to 21.87 per cent from 22.74 per cent.
Core inflation also eased to 20.33 per cent from 21.33 per cent over the same period. Month-on-month, inflation slowed sharply to 0.74 per cent in August compared with 1.99 per cent in July.
First in 5 years
The PUNCH reports that this marks the first cut under the leadership of Cardoso, following six consecutive hikes in 2024, which were then followed by three straight pauses in 2025.
It was also observed that the last time the CBN cut its benchmark interest rate was in September 2020, five years ago, when it lowered the Monetary Policy Rate from 12.5 per cent to 11.5 per cent.
On the broader economy, the MPC highlighted Nigeria’s Q2 GDP growth of 4.23 per cent, up from 3.13 per cent in Q1, driven largely by a rebound in the oil sector, which expanded by 20.46 per cent compared with just 1.87 per cent in the previous quarter.
