The Central Bank of Nigeria (CBN) has announced significant adjustments to its monetary policy, including the first interest rate cut since May 2023. The decision followed the 302nd Monetary Policy Committee (MPC) meeting, with Governor Olayemi Cardoso disclosing the outcomes at a press conference on Tuesday in Abuja.

The MPC unanimously agreed to slash the Monetary Policy Rate (MPR) by 50 basis points, bringing it down from 27.50 percent to 27 percent. The MPR serves as the baseline interest rate upon which other rates in the economy are built. In addition to the rate cut, the committee made crucial adjustments to the Cash Reserve Ratio (CRR), setting it at 45 percent for Deposit Money Banks (down from 50%) while retaining it at 16 percent for Merchant Banks. A new measure introduces a 75 percent CRR on non-Treasury Single Accounts (non-TSA public sector departments). The asymmetric corridor around the MPR was also adjusted to +250/-250 basis points, while the liquidity ratio (LR) was retained at 30 percent.

The CBN justified these monetary policy easing measures on the back of sustained disinflation for five consecutive months, indicating a moderation in inflationary pressures. Governor Cardoso highlighted that the committee expressed satisfaction with the prevailing macroeconomic stability, evidenced by improvements in various indicators such as sustained disinflation, improved output growth, a stable exchange rate, and robust external reserves. He particularly noted the increased momentum of disinflation in August, which saw inflation moderate to 21.12 percent.

A key factor influencing the MPC's decision was the persistent build-up of excess liquidity within the banking system, largely stemming from fiscal releases and improved revenues. The adjustments to the CRR and the width of the standing facilities corridor are intended to manage liquidity, boost interbank market transactions, and enhance market stability, while supporting economic growth and recovery efforts.

Economically, Nigeria recorded 4.23 percent growth in the second quarter of 2025, an improvement from 3.13 percent in the preceding quarter. While sectors like agriculture, services, industries, and oil demonstrated growth, manufacturing, trade, ICT, and motor assembly experienced contraction. Despite the recent policy adjustments, Nigeria's interest rate and inflation figures remain among the highest in Africa, notably higher than Ghana (interest rate 21.5%, inflation 11.5%) and South Africa (interest rate 7%, August inflation 3.3%).

The Center for the Promotion of Private Enterprise (CPPE) lauded the CBN's decision, calling it a timely intervention for Nigerian businesses and the broader economy. Muda Yusuf, CEO of CPPE, stated that the move signals a logical pivot towards growth, following a period of macroeconomic stability and slowed inflation. The CPPE anticipates that lowering the MPR and CRR will enhance liquidity, reduce borrowing costs, and unlock capital for productive sectors, particularly benefiting small and medium-sized enterprises (SMEs). This is expected to spur new investments, support business expansion, boost capacity utilization, and ultimately stimulate output growth and job creation.

The MPC affirmed its commitment to proactive, data-driven policy responses to maintain macroeconomic stability. The next committee meeting is scheduled for November 24 and November 25, 2025.