The Central Bank of Nigeria’s Monetary Policy Committee has reduced the interest rate from 27.50 percent to 27 percent. This decision was announced by CBN Governor Olayemi Cardoso at a press conference following the 302nd MPC meeting in Abuja. The rate cut was unanimously agreed upon by the committee members, citing the country’s declining inflation rate over the past five months.
The MPC also made adjustments to the Cash Reserve Ratio, setting it at 45 percent for Deposit Money Banks and 16 percent for Merchant Banks. Additionally, the asymmetric corridor was adjusted to +250/-250 basis points around the Monetary Policy Rate. The liquidity ratio was retained at 30 percent.
This interest rate cut is the first since May 2023, when it was reduced from 18 percent to 17.5 percent. The move comes as industrial stakeholders and manufacturers have been calling for a downward easing of the Monetary Policy Rate to decrease production costs. Nigeria’s inflation rate has moderated, standing at 21.12 percent in August, marking the fifth consecutive month of decline.
The country’s economy has also shown growth, with a 4.23 percent increase in the second quarter of 2025, compared to 3.13 percent in the preceding quarter. While some sectors, including agriculture, services, and industries, recorded growth, others such as manufacturing, trade, and ICT contracted.
In comparison to other African countries, Nigeria’s interest rate and inflation remain among the highest. Ghana, for example, has an interest rate of 21.5 percent, after cutting it by 350 basis points, and an inflation rate of 11.5 percent. South Africa’s interest rate is 7 percent, with an August inflation rate of 3.3 percent.
The interest rate cut is a significant development, particularly in the context of the country’s economic growth and inflation trends. As Nigeria’s economy continues to evolve, decisions like this will be closely watched by stakeholders and analysts alike. The reduction in interest rates may have implications for the cost of borrowing and production, potentially influencing investment and consumption patterns in the country.
