The Central Bank of Nigeria’s Monetary Policy Committee (MPC) has reduced the interest rate by 50 basis points, lowering it from 27.5 percent in July to 27 percent.
The decision was taken at the committee’s 302nd meeting held on September 22 and 23, 2025. The asymmetric corridor around the Monetary Policy Rate (MPR) was retained at +260 and -250 basis points, a move aimed at providing a framework for liquidity management while signaling caution toward market volatility.
CBN Governor, Olayemi Cardoso, said the decision was based on sustained disinflation over the past five months, projections of declining inflation for the remainder of 2025, and the need to support economic stability.
The MPC also reduced the cash reserve requirement for commercial banks to 45 percent, while retaining that of merchant banks at 16 percent. In addition, a 75 percent cash reserve requirement was introduced on non-TSA public sector deposits to strengthen liquidity management.
To improve efficiency in the inter-bank market and enhance monetary policy transmission, the committee adjusted the standing facilities corridor, while keeping the liquidity ratio unchanged at 30 percent.
The MPC expressed satisfaction with prevailing macroeconomic stability, citing improvements such as declining inflation, stable exchange rates, stronger external reserves, and improved output growth.
The committee particularly highlighted August 2025 as recording the highest momentum of disinflation in five months, driven by monetary tightening, exchange rate stability, and increased capital inflows. It also noted that moderation in fuel prices and higher crude oil production supported this trend.
Despite progress, the MPC warned about risks posed by excess liquidity in the banking system, largely due to fiscal releases from improved government revenues. It stressed the need for a stronger inter-bank system to ensure effective transmission of monetary policies.
Meanwhile, Nigeria’s Gross Domestic Product (GDP) grew by 4.23 percent year-on-year in the second quarter of 2025, compared to 3.48 percent in the same period of 2024. Data from the National Bureau of Statistics showed the agriculture sector grew by 2.82 percent, the industry sector by 7.45 percent, and services by 3.94 percent.
The industry sector’s share of GDP increased to 17.31 percent in Q2 2025, up from 16.79 percent in the same period of 2024. In nominal terms, aggregate GDP stood at ₦100.73 trillion, representing a year-on-year growth of 19.23 percent.