ABUJA — The Central Bank of Nigeria (CBN) on Tuesday reduced the Monetary Policy Rate (MPR) from 27.5 percent to 27 percent, marking the first interest rate cut since May 2023.
CBN Governor Olayemi Cardoso announced the decision at a press briefing following the conclusion of the two-day 302nd Monetary Policy Committee (MPC) meeting in Abuja. The move comes after the committee observed a steady decline in inflation over the past five months.
“The members of the MPC unanimously agreed to reduce the MPR due to the continued moderation of inflation,” Cardoso said.
In addition to the rate cut, the MPC adjusted the Cash Reserve Ratio (CRR) to 45 percent for Deposit Money Banks and 16 percent for Merchant Banks, while maintaining the liquidity ratio (LR) at 30 percent. The asymmetric corridor was also adjusted to +250/-250 basis points around the MPR.
The decision is expected to ease borrowing costs for businesses and stimulate economic activity, responding to calls from industrial stakeholders and manufacturers for a downward adjustment in the MPR to reduce production costs.
Economic data shows inflation moderated to 21.12 percent in August for the fifth consecutive month. Nigeria’s economy also grew by 4.23 percent in the second quarter of 2025, up from 3.13 percent in the previous quarter, with growth recorded in agriculture, services, industries, and oil sectors, while manufacturing, trade, ICT, and motor assembly contracted.
Despite the cut, Nigeria’s interest rate and inflation remain among the highest in Africa, surpassing rates in Ghana and South Africa. Ghana recently reduced its interest rate by 350 basis points to 21.5 percent, with inflation at 11.5 percent, while South Africa’s rate stands at 7 percent with inflation at 3.3 percent.
This policy shift signals the CBN’s intention to balance inflation control with economic growth, potentially offering relief to businesses and consumers alike.
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