CBN cuts interest rate to 27% as inflation decelerates

The Central Bank of Nigeria’s (CBN) Monetary Policy Committee (MPC) has lowered the benchmark interest rate by 50 basis points, reducing the Monetary Policy Rate (MPR) from 27.5 per cent to 27 per cent at the conclusion of its 302nd meeting held on September 22–23, 2025.

The asymmetric corridor around the MPR was retained at +260 and -250 basis points, a move aimed at sustaining liquidity management while signalling the Bank’s cautious stance on market volatility.

CBN Governor, Dr. Olayemi Cardoso, who addressed journalists after the meeting, said the rate cut was informed by five consecutive months of disinflation, forecasts of further inflation moderation for the rest of the year, and the need to support domestic economic recovery.

Alongside the rate adjustment, the MPC reduced the cash reserve requirement (CRR) for commercial banks to 45 per cent, while keeping that of merchant banks unchanged at 16 per cent. A new 75 per cent CRR was also introduced on non-TSA public sector deposits to strengthen liquidity control. The liquidity ratio was maintained at 30 per cent.

The Committee also fine-tuned the standing facilities corridor to boost interbank market efficiency and reinforce policy transmission.

Members expressed confidence in the country’s macroeconomic outlook, citing improved indicators such as sustained disinflation, stable exchange rates, stronger output growth, and robust external reserves. Disinflation momentum in August 2025 was highlighted as the steepest in five months, driven by tighter monetary policy, exchange rate stability, rising crude oil output, and moderation in PMS prices.

“The stability in the macroeconomic environment has created room for monetary policy to shift towards supporting growth and recovery,” the MPC noted in its communiqué.