For the first time since 2024, the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN), after a two-day meeting in Abuja, voted to reduce the interest rate or Monetary Policy Rate (MPR) by 50basis points to 27per cent from the previous 27.50 per cent.
The decision to reduce the interest rate by the committee is on the backdrop of a decline in the inflation rate and stability in the foreign exchange market. Inflation rate in Nigeria eased for the fifth consecutive month, declining sharply by 176basis points to 20.12per cent in August from 21.88 per cent in July 2025. The slowdown was driven by softer price pressures in both food (21.87 per cent vs. July: 22.74 per cent) and core sub-items (20.33 per cent vs. 21.33 per cent).
The committee, however, adjusted the asymmetric corridor around the MPR to +250bps/-250bps (previous: +500bps/-100bps) and reduced the CRR for Deposit Money Banks to 45per cent from the previous 50 per cent.
They also retain the CRR for merchant banks at 16per cent and introduce a 75.0per cent CRR on non-Treasury Single Account (TSA) public sector deposits. In addition, the committee retains a liquidity rate of 30per percent.