The Central Bank of Nigeria (CBN), through its Monetary Policy Committee (MPC), has reduced the Monetary Policy Rate (MPR) by 50 basis points, from 27.5% in July to 27%.
This decision was reached at the Committee’s 302nd meeting held on September 22–23, 2025, following a vote by all 12 members.
The MPC retained the asymmetric corridor around the MPR at +260 and -250 basis points, maintaining a framework for managing market liquidity and signaling a cautious stance toward emerging volatility.
Speaking after the meeting, CBN Governor Olayemi Cardoso stated that the decision to lower the benchmark interest rate was based on the continued disinflation recorded over the past five months, projections of further declines in inflation for the remainder of 2025, and the need to sustain economic recovery momentum.
In addition to cutting the MPR, the Committee reduced the Cash Reserve Ratio (CRR) for commercial banks to 45 percent, while retaining the CRR for merchant banks at 16 percent. It also introduced a 75 percent CRR on non-TSA public sector deposits as part of efforts to strengthen liquidity management across the financial system. Furthermore, the MPC adjusted the standing facilities corridor to improve the efficiency of the interbank market and enhance the transmission of monetary policy decisions. The liquidity ratio was left unchanged at 30 percent.
The MPC expressed satisfaction with Nigeria’s improving macroeconomic environment, citing key indicators such as sustained disinflation, stable exchange rates, improving output growth, and robust external reserves. It noted that August 2025 recorded the strongest pace of disinflation in the past five months.
This downward trend in inflation was supported by continued monetary tightening, exchange rate stability, and increased capital inflows, which contributed to a surplus in the current account balance. The Committee also pointed to moderating petrol prices and a notable increase in crude oil production as factors that helped anchor inflation expectations.
According to the Committee, the overall stability in the macroeconomic environment provided some headroom for monetary policy to play a more active role in supporting economic growth. However, the MPC also noted the persistent excess liquidity in the banking system, largely resulting from fiscal disbursements linked to rising government revenues. It emphasized that this excess liquidity posed risks to price and financial stability.
The Committee further observed that ensuring the effective functioning of the interbank market is essential for improving monetary policy transmission. This, it explained, was a key factor behind the decision to adjust the width of the standing facilities corridor, in order to boost interbank transactions and support overall market stability.
According to data released by the National Bureau of Statistics (NBS), Nigeria’s Gross Domestic Product (GDP) grew by 4.23 percent year-on-year in the second quarter of 2025, up from 3.48 percent in the corresponding period of 2024, indicating continued recovery and economic resilience.
The agriculture sector recorded a real growth rate of 2.82 percent during the quarter, up from 2.60 percent in the same period of 2024. The industry sector showed the most significant improvement, expanding by 7.45 percent compared to 3.72 percent in the second quarter of the previous year. The services sector also recorded a modest uptick, growing by 3.94 percent versus 3.83 percent in Q2 2024.
The industry sector’s contribution to GDP rose to 17.31 percent in Q2 2025, compared to 16.79 percent in the same quarter of 2024. In nominal terms, aggregate GDP stood at ₦100.73 trillion in the second quarter of 2025, an increase from ₦84.48 trillion in Q2 2024, representing a nominal year-on-year growth of 19.23 percent.
