CBN cuts monetary policy rate to 27%, cites sustained disinflation, economic recovery
CBN Building
CBN cuts monetary policy rate to 27%, cites sustained disinflation, economic recovery
Abdullateef Fowewe
The Central Bank of Nigeria (CBN) has reduced its Monetary Policy Rate (MPR) by 50 basis points to 27.00 per cent following the 302nd Monetary Policy Committee (MPC) meeting held on September 22 to 23, 2025.
The Committee, with all twelve members in attendance, also adjusted other key policy rates to support liquidity management and economic stability.
Governor of Central Bank of Nigeria, Olayemi Cardoso stated, “The Committee’s decision to lower the monetary policy rate was predicated on the sustained disinflation recorded in the past five months, projections of declining inflation for the rest of 2025 and the need to support economic recovery efforts.”
Key decisions made by the MPC include:
– Reducing the MPR from 27.50 to 27.00 per cent.
– Adjusting the Standing Facilities corridor to +250/-250 basis points.
– Raising the Cash Reserve Ratio (CRR) for commercial banks to 45 per cent, and introducing a 75 per cent CRR on non-TSA public sector deposits.
– Maintaining the Liquidity Ratio at 30 per cent.
According to the communique obtained from the CBN’s website on Tuesday, the Committee expressed satisfaction with “the prevailing macroeconomic stability, evidenced by the improvements in several indicators including sustained disinflation, improved output growth, stable exchange rate and robust external reserves.”
Headline inflation fell to 20.12 per cent in August 2025 from 21.88 per cent in July, driven by lower food and core inflation.
The second quarter GDP growth was 4.23 per cent, up from 3.13 per cent in the first quarter, reflecting stronger performance in the oil sector with a 20.46 per cent growth rate.
“Stability in the macroeconomic environment offered some headroom for monetary policy to support economic recovery,” the MPC observed, noting concerns about excess liquidity due to fiscal releases but emphasising the importance of an efficient interbank market.
The Bank also highlighted the resilience of the banking system amid ongoing recapitalisation, urging completion of these efforts while reassuring that recent policy changes would not threaten financial stability.
On the outlook, the MPC expects inflation to continue declining, helped by previous rate hikes, a stable foreign exchange market, and increased food supply from the harvest season.
However, the next MPC meeting is scheduled for November 24-25, 2025.
