By Zainab Ibrahim
Date: September 23, 2025
ABUJA, Nigeria
The Central Bank of Nigeria (CBN) has announced a reduction in the Monetary Policy Rate (MPR) by 50 basis points to 27%, following its 302nd Monetary Policy Committee (MPC) meeting held on September 22nd and 23rd, 2025.
This was revealed in Communiqué No. 159, presented by the MPC Chairman and Governor of the CBN, Mr. Olayemi Cardoso, after a full committee session attended by all 12 members.
Key Monetary Policy Decisions
Following a review of domestic and global macroeconomic conditions, the Committee resolved as follows:
- Reduced the MPR by 50 basis points to 27%.
- Adjusted the asymmetric corridor around the MPR to +250/-250 basis points to enhance monetary policy transmission.
- Raised the Cash Reserve Ratio (CRR) for commercial banks to 45%, while retaining CRR for merchant banks at 60%.
- Introduced a 75% CRR on non-TSA public sector deposits to strengthen liquidity management.
- Maintained the Liquidity Ratio at 30%.
Why the Rate Was Cut
The decision to ease the benchmark interest rate was driven by:
- Sustained disinflation over the past five months,
- Projections indicating further declines in inflation through the end of 2025,
- The need to support ongoing economic recovery efforts.
According to the CBN, these dynamics create an opportunity to fine-tune policy while preserving macroeconomic stability.
Improving Transmission and Liquidity Management
The MPC also moved to improve the efficiency of the interbank market by adjusting the standing lending and deposit facility corridors. Additionally, the introduction of a 75% CRR on non-TSA public sector deposits is aimed at tightening excess liquidity in the banking system without disrupting credit expansion to the real economy.
Economic Outlook: Signs of a Strengthening Economy
The Committee expressed optimism over the direction of the economy, citing multiple positive indicators:
- Disinflation: Headline inflation (year-on-year) fell from 22.12% in July to 20.12% in August 2025. On a monthly basis, inflation slowed to 0.74% in August from 1.99% in July.
- Core inflation declined to 20.33% in August from 21.33% in July, mainly due to lower prices in housing, utilities, transport, and logistics.
- Food inflation also moderated, falling to 21.87% from 22.74%, driven by lower prices of key staples.
- Robust GDP growth: Nigeria’s economy grew by 4.23% year-on-year in Q2 2025, up from 3.13% in Q1, this signifies the economy’s resilience.
- Stable exchange rate and robust external reserves, providing a solid foundation for policy stability.
Financial Sector Remains Resilient
The MPC commended the continued soundness and resilience of Nigeria’s banking system. It reaffirmed its commitment to supporting a stable financial sector that can efficiently intermediate credit to critical growth sectors.
Exchange Rate Strategy
The Committee emphasized the importance of a stable foreign exchange market in achieving rapid disinflation. It called on the CBN to sustain current FX policies, attract capital inflows, and deepen FX liquidity across market segments.
Looking Ahead
The next MPC meeting is scheduled to hold on Monday, November 24 and Tuesday, November 25, 2025. With inflation on a downward trend, output improving, and the naira relatively stable, the CBN is signaling a cautious shift toward pro-growth monetary policy, balancing liquidity control with economic stimulus.
