On September 23, 2025, the Central Bank of Nigeria (CBN) reduced its benchmark interest rate by 50 basis points, from 27.5% to 27%.
CBN Governor Olayemi Cardoso announced the decision after the 302nd Monetary Policy Committee (MPC) meeting in Abuja.
Reserve Requirement Changes
Cardoso revealed adjustments to banking rules. The cash reserve ratio (CRR) for commercial banks dropped to 45% from 50%, while merchant banks’ CRR stayed at 16%. A new 75% CRR was set for non-TSA public sector deposits.
The MPC also revised the asymmetric corridor around the Monetary Policy Rate (MPR) to +250bps/-250bps, from +500bps/-100bps.
Inflation Drives Decision
The rate cut follows a decline in Nigeria’s inflation, which fell to 20.12% in August 2025 from 21.88% in July, marking five months of easing.
Lower food (21.87% vs. 22.74%) and core item (20.33% vs. 21.33%) prices fueled the slowdown, prompting the MPC’s action.
Economic Context
This marks the CBN’s first rate cut since September 2020, when it lowered the MPR from 12.5% to 11.5% to aid recovery during the COVID-19 crisis.
The 2025 reduction aims to stimulate growth amid improving economic indicators.
Looking Ahead
The CBN’s adjustments signal a shift toward easing monetary policy to support Nigeria’s economy. Analysts expect further measures to sustain growth while managing inflation pressures.
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