The Governor of the Central Bank of Nigeria (CBN), Yemi Cardoso, announced that the Monetary Policy Committee (MPC) has decided to reduce the Monetary Policy Rate (MPR) by fifty basis points, bringing it down to 27%. This decision marks the first rate cut in five years, signaling a shift after a prolonged period of monetary tightening.

The MPR has been reduced by fifty basis points to 27%. The standing facilities corridor has been adjusted to +250/-250 basis points around the MPR. The Cash Reserve Ratio (CRR) has been adjusted to 45% for commercial banks while retaining 16% for merchant banks. A 75% CRR was introduced on non-Treasury Single Account (TSA) public sector deposits to enhance liquidity management, and the liquidity ratio remains unchanged at 30%.

The decision was influenced by the consistent disinflation recorded over the past months. Inflation had averaged thirty-one percent in 2024 but fell to twenty-point-one percent in August 2025. Projections indicate a further decline in inflation for the remainder of 2025, with the IMF projecting average inflation of twenty-four percent in 2025 and twenty-three percent in 2026. The rate cut aims to bolster economic recovery efforts, as Nigeria’s GDP grew by over four percent in the second quarter of 2025.

The rate cut is expected to lower borrowing costs, potentially benefiting the real sector, manufacturers, and SMEs. However, some analysts are concerned about the sustainability of this action due to insecurity and volatility in the global commodities market. The Nigeria Employers’ Consultative Association (NECA) lauded the CBN’s decision but cautioned that the benefits would only be felt if it effectively translates into the real economy. The Centre for the Promotion of Private Enterprise (CPPE) also commended the CBN for easing credit conditions to support growth and investment.

Cardoso noted the resilience of the banking system, with strong soundness indicators, and that fourteen banks have met the new capital requirements.