CBN Cuts Interest Rate to 27%, Citing Continued Disinflation and Economic Stability
The Central Bank of Nigeria’s Monetary Policy Committee (MPC) has reduced the benchmark interest rate by 50 basis points, lowering it from 27.5% in July to 27% following its 302nd meeting held on September 22 and 23, 2025.
Despite the rate cut, the MPC maintained the asymmetric corridor around the Monetary Policy Rate (MPR) at +260 and -250 basis points. This decision reflects a measured approach to managing liquidity and mitigating market volatility.
CBN Governor, Dr. Olayemi Cardoso, addressing the press after the meeting, said the decision was driven by consistent disinflation over the past five months, a positive outlook for further inflation decline through the end of 2025, and the need to support ongoing economic recovery.
In further monetary policy adjustments, the MPC reduced the cash reserve ratio (CRR) for commercial banks to 45%, while the CRR for merchant banks remains unchanged at 16%. A new 75% CRR was also introduced for non-TSA public sector deposits, aimed at strengthening liquidity management.
The Committee left the liquidity ratio steady at 30% and adjusted the standing lending and deposit facilities to enhance market efficiency and improve the transmission of monetary policy.
In its review, the MPC highlighted improvements in key macroeconomic indicators, noting stable exchange rates, sustained disinflation, increased output growth, and strong external reserves. The Committee particularly emphasized the momentum of disinflation in August 2025 — the most significant in the past five months.
According to the Committee, this inflation slowdown was driven by tighter monetary policy, exchange rate stability, higher capital inflows, and a surplus in the current account balance. Other contributing factors included the steady decline in PMS prices and increased crude oil output.
“The current macroeconomic stability has created room for monetary policy to further support economic growth and recovery,” the Committee concluded.