The Central Bank of Nigeria’s Monetary Policy Committee (MPC) has lowered the policy interest rate from 27.50 percent to 27 percent. CBN Governor Olayemi Cardoso announced the decision at a press conference after the 302nd MPC meeting in Abuja. The cut was unanimously approved by committee members, who pointed to the country’s declining inflation rate over the past five months as a key justification.
In addition to the rate reduction, the MPC adjusted the Cash Reserve Ratio, setting it at 45 percent for Deposit Money Banks and 16 percent for Merchant Banks. The asymmetric corridor was also revised to +250/‑250 basis points around the Monetary Policy Rate, while the liquidity ratio remained unchanged at 30 percent.
This is the first interest‑rate cut since May 2023, when the rate was reduced from 18 percent to 17.5 percent. The move responds to calls from industrial stakeholders and manufacturers for a lower Monetary Policy Rate to reduce production costs. Nigeria’s inflation has moderated, standing at 21.12 percent in August—its fifth consecutive month of decline. Meanwhile, the economy grew by 4.23 percent in the second quarter of 2025, up from 3.13 percent in the previous quarter. Growth was recorded in agriculture, services, and industry, although manufacturing, trade, and ICT contracted.
Compared with other African nations, Nigeria’s interest rate and inflation remain among the highest. Ghana, after a 350‑basis‑point cut, now has an interest rate of 21.5 percent and inflation of 11.5 percent. South Africa’s interest rate is 7 percent, with August inflation at 3.3 percent.
The rate cut is a significant development in the context of Nigeria’s economic growth and inflation trends. As the economy evolves, such decisions will be closely watched by stakeholders and analysts, given their potential impact on borrowing costs, production, investment, and consumption patterns.
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