The Central Bank of Nigeria (CBN) has reduced the benchmark interest rate (Monetary Policy Rate, MPR) by 50 basis points, from 27.5% to 27%, marking the first rate cut in five years.
CBN Governor Olayemi Cardoso announced the decision on Tuesday while addressing journalists after the conclusion of the 302nd Monetary Policy Committee (MPC) meeting in Abuja.
The MPC also approved key adjustments:
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Cash Reserve Requirement (CRR) for commercial banks lowered to 45% (from 50%), while that of merchant banks remains at 16%.
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A new 75% CRR imposed on non-TSA public sector deposits.
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Asymmetric corridor around the MPR narrowed to +250/-250 basis points, from the previous +500/-100.
Cardoso explained that the decision was guided by the moderation in Nigeria’s inflation rate, which eased for the fifth consecutive month, dropping to 20.12% in August 2025 from 21.88% in July. The decline was attributed to softer price pressures in both food (21.87% vs 22.74% in July) and core sub-items (20.33% vs 21.33%).
The last time the CBN reduced the MPR was in September 2020, when the rate was cut by 100 basis points (12.5% to 11.5%) to cushion the economy during the COVID-19 pandemic.
The latest move signals the apex bank’s bid to balance growth and inflation management amid Nigeria’s fragile economic recovery.
