September 23, 2025-Published by Cyril
The Central Bank of Nigeria (CBN) has reduced the Monetary Policy Rate (MPR) to 27.00 per cent, marking the first rate cut since 2020. This decision was announced by CBN Governor Olayemi Cardoso on Tuesday in Abuja after the conclusion of the 302nd Monetary Policy Committee (MPC) meeting.
Cardoso explained that the committee voted unanimously to cut the MPR by 50 basis points, citing sustained disinflation, declining inflation projections, and the need to stimulate economic recovery.
Key Policy Decisions
- MPR reduced by 50 basis points to 27.00%.
- Standing Facilities corridor adjusted to +250/-250 basis points.
- The Cash Reserve Ratio (CRR) for commercial banks was raised to 45% (while merchant banks retained a 16% rate).
- 75% CRR introduced on non-TSA public sector deposits.
- Liquidity Ratio maintained at 30%.
Inflation Trends
According to the CBN, headline inflation eased to 20.12% in August from 21.88% in July. Food inflation also moderated to 21.87%, while core inflation declined to 20.33%. Month-on-month inflation slowed sharply to 0.74% in August, compared with 1.99% in July.
Economic Growth Outlook
The MPC highlighted Nigeria’s Q2 GDP growth of 4.23%, an improvement from 3.13% in Q1, largely driven by a strong rebound in the oil sector, which expanded by 20.46% compared with 1.87% in the previous quarter.
Foreign reserves rose to $43.05bn as of September 11, 2025, providing 8.28 months of import cover, while the current account balance posted a surplus of $5.28bn in Q2, up from $2.85bn in Q1.
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Cardoso also revealed that 14 banks have met the new recapitalisation requirements, ensuring stability in the financial sector.
Continental Shift
Nigeria’s rate cut follows similar moves across Africa: Ghana slashed its policy rate to 21.5% last week, while Kenya lowered its benchmark rate to 9.5% in August. Despite this, Nigeria’s 27% policy rate remains the highest on the continent, reflecting persistent inflationary pressures.
The next MPC meeting is scheduled for November 24–25, 2025.
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