The Central Bank of Nigeria’s Monetary Policy Committee has reduced the interest rate by 50 basis points, from 27.5 per cent in July to 27 per cent.
This followed the decision of the 12 members of the Committee at its 302nd meeting held on September 22nd and 23rd, 2025.
The asymmetric corridor around the MPR was retained at +260 and -250 basis points, providing a framework for liquidity management and signaling the CBN’s cautious approach toward market volatility.
CBN Governor, Olayemi Cardoso, who briefed journalists after the meeting, said the committee’s decision to lower the monetary policy rate was predicated 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 inflation records.
It also reduced the cash reserve requirement to 45 per cent for commercial banks and retained that of merchant banks at 16 per cent.
The Committee has also introduced a 75 per cent cash reserve requirement on non-TSA public sector deposits for enhanced liquidity management.
To improve the efficiency of the bank market and strengthen monetary policy transmission, the MPC also adjusted the standing facilities corridor
Meanwhile, the liquidity ratio has been left unchanged at 30 percent.
Consideration:
The MPC expressed satisfaction with the prevailing macroeconomic stability evidenced by the improvements in several indicators such as sustained disinflation, 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, and increased capital inflow surplus current account balance, has helped to broadly anchor inflation expectations, the Committee noted.
“Other factors that contributed to the deceleration include the continued moderation in the price of PMS and the notable increase in crude oil production.
“In the view of the committee, the stability in the macroeconomic environment offered some headroom for monetary policy to support economic growth and recovery.”
“Notwithstanding the consistent deceleration in inflation, the Committee said it observed the persistent reduction of excess liquidity in the banking system, resulting largely from fiscal releases emerging from improving revenues.
“Being mindful of the need to preserve the prevailing macroeconomic stability, the MPC noted the risk posed by the excess liquidity in the banking system.
“Members noted that the effective functioning of the inter-banking system is critical to enhance transmission of the monetary policy.
“This, therefore, informed the decision to adjust the width of the standing facilities corridor to boost inter-banking market transactions and the stability of the market.”
Nigeria’s Gross Domestic Product (GDP) grew by 4.23 per cent on a year-on-year basis in the second quarter of 2025, according to data released by the National Bureau of Statistics (NBS) on Monday.
The latest figures showed an improvement from the 3.48 per cent growth recorded in the same quarter of 2024, indicating continued recovery and resilience in the economy.
According to the report, the agriculture sector grew by 2.82 per cent in real terms during the period under review, an increase from the 2.60 per cent recorded in the second quarter of 2024.
The industry sector also showed strong performance, growing by 7.45 per cent, compared to 3.72 per cent in the corresponding period of the previous year. Meanwhile, the services sector recorded a real growth of 3.94 per cent, slightly up from the 3.83 per cent posted in the second quarter of 2024.
The share of the industry sector in the country’s GDP increased to 17.31 per cent in Q2 2025, higher than the 16.79 per cent recorded in the same quarter of 2024.
In nominal terms, aggregate GDP stood at N100.73 trillion in the second quarter of 2025, up from N84.48 trillion in the same period of the previous year, representing a nominal year-on-year growth of 19.23 per cent.
