The Central Bank of Nigeria (CBN) has cut its benchmark interest rate for the first time in five years, lowering the Monetary Policy Rate (MPR) from 27.5% to 27%.
CBN Governor Olayemi Cardoso announced the move on Tuesday after the Monetary Policy Committee’s (MPC) 302nd meeting in Abuja, describing the cut as a “unanimous decision” aimed at supporting economic recovery.
The MPR, which serves as the anchor for all lending rates in the economy, was slashed by 50 basis points, marking the first rate reduction since 2020. The decision follows a steady decline in inflation, which dropped to 20.33% in August 2025 — the lowest in five months.
Alongside the rate cut, the MPC adjusted the cash reserve ratio (CRR) for commercial banks down from 50% to 45%, retained the liquidity ratio at 30%, and introduced a 75% CRR on non-TSA public sector deposits.
“The MPC expressed satisfaction with the prevailing macroeconomic stability — disinflation, stronger output growth, stable exchange rate and robust external reserves,” Cardoso told journalists.
He credited the disinflation trend to tighter monetary policy, improved capital inflows, stable forex markets, lower petrol prices and increased crude oil production.
However, Cardoso warned of “excess liquidity building up in the banking system” due to higher government revenues, noting that tighter interbank market operations were needed to curb risks.
The CBN chief stressed the committee would continue data-driven interventions to maintain economic stability, with the next MPC meeting scheduled for November 24–25, 2025.
