The Governor of the Central Bank of Nigeria (CBN), Mr. Olayemi Cardoso, on Tuesday in Abuja announced that the Monetary Policy Committee (MPC) of the CBN has resolved to reduce the interest rate to 27 per cent from 27.5 per cent in July.
Addressing journalists after the meeting of the MPC, Cardoso said that the decision to lower the monetary policy rate was informed by the sustained disinflation recorded in the past five months, projections of declining inflation for the rest of 2025, and the need to support economic inflation records.
This followed the decision of the 12 members of the Committee at its 302nd meeting held on September 22nd and 23rd, 2025.
The asymmetric corridor around the MPR was retained at +260 and -250 basis points, providing a framework for liquidity management and signaling the CBN’s cautious approach toward market volatility.
He explained that the NPC also reduced the cash reserve requirement to 45 per cent for commercial banks and retained that of merchant banks at 16 per cent.
According to him, the MPC also introduced a 75 per cent cash reserve requirement on non-TSA public sector deposits for enhanced liquidity management.
And to improve the efficiency of the bank market and strengthen monetary policy transmission, the MPC also adjusted the standing facilities corridor, while the liquidity ratio was left unchanged at 30 per cent.
Cardoso disclosed that the MPC was satisfied with the prevailing macroeconomic stability evidenced by the improvements in several indicators such as sustained disinflation, improved output growth, stable exchange rate, and robust external reserves.
He noted that the increased momentum of disinflation in August 2025, being the highest in the past five months and the deceleration, underpinned by monetary policy tightening, exchange rate stability and increased capital inflow surplus current account balance, helped to broadly anchor inflation expectations.
“Other factors that contributed to the deceleration include the continued moderation in the price of petrol and the notable increase in crude oil production.
“In the view of the committee, the stability in the macroeconomic environment offered some headroom for monetary policy to support economic growth and recovery,” he said.
He added that notwithstanding the consistent deceleration in inflation, the Committee said it observed the persistent reduction of excess liquidity in the banking system, resulting largely from fiscal releases emerging from improving revenues.
Cardoso explained that the MPC being mindful of the need to preserve the prevailing macroeconomic stability, noted the risk posed by the excess liquidity in the banking system and that effective functioning of the inter-banking system is critical to enhance transmission of the monetary policy.
“This, therefore, informed the decision to adjust the width of the standing facilities corridor to boost inter-banking market transactions and the stability of the market,” he said.
GIK/APA
