Raphael Kanu
The Central Bank of Nigeria (CBN) has reduced the Monetary Policy Rate (MPR) by 50 basis points, moving it from 27.5 percent to 27 percent.
Governor of the Bank, Mr. Olayemi Cardoso, announced the decision on Tuesday during a press briefing at the end of the Monetary Policy Committee (MPC) meeting in Abuja.
Cardoso explained that the Committee also adjusted the standing facilities corridor around the MPR to +250/-250 basis points, raised the Cash Reserve Requirement (CRR) for commercial banks to 45 percent while retaining that of merchant banks at 16 percent, and introduced a 75 percent CRR on non-TSA public sector deposits. The Liquidity Ratio was, however, retained at 30 percent.
The MPR is the benchmark interest rate that guides lending by commercial banks, and any adjustment has significant implications for inflation, credit availability, and investment decisions. Over the years, the rate has seen notable fluctuations in response to Nigeria’s economic realities.
For much of the past decade, the MPR hovered between 11 and 14 percent, before being raised aggressively from 2022 onward as inflationary pressures intensified. By mid-2024, the CBN pushed the rate to 26.25 percent, and later to 27.5 percent — the highest in Nigeria’s history — as part of its tightening stance to curb spiralling inflation.
Nigeria has been grappling with high inflation, which peaked above 30 percent in 2024. However, with inflation easing for five consecutive months, the apex bank has now signalled a cautious shift towards supporting growth while maintaining price stability.
Cardoso noted that the latest rate cut was aimed at consolidating economic recovery and stimulating private sector activity, while the corridor adjustment would improve efficiency in the interbank market and strengthen monetary policy transmission.