The Central Bank of Nigeria has lowered its Monetary Policy Rate by 50 basis points to 27 percent, marking the first cut since 2020’s Covid‑19 pandemic. Announced by Governor Olayemi Cardoso, the move is expected to ease pressure on businesses and households as Nigerians continue to demand a reduction in the cost of living.
The Monetary Policy Committee based its decision on improving macro‑economic conditions, including a stable exchange rate, robust external reserves, and sustained disinflation. Headline inflation fell for the fifth consecutive month, reaching 21.12 percent in August. The exchange rate held at N1,487.37 per dollar, and external reserves stood at $42.13 billion as of September 2022. Cardoso highlighted these factors—continued disinflation, better output growth, a stable exchange rate, and strong reserves—as justification for the cut.
Alongside the rate reduction, the committee adjusted the Cash Reserve Ratio (CRR) for Deposit Money Banks and Merchant Banks and introduced a 75 percent CRR on non‑TSA deposits. The asymmetric corridor was set at ±250 basis points around the MPR, while the Liquidity Ratio remained at 30 percent.
The announcement had an immediate market impact: the naira appreciated in the money market, though the Nigerian Exchange closed lower, with investors losing N322 billion on Tuesday. The Centre for the Promotion of Private Enterprise welcomed the policy shift, calling it a significant step toward supporting growth and investment. The Nigeria Employers’ Consultative Association also praised the cut but cautioned that macro‑economic stability will only be meaningful when Nigerians experience tangible relief through lower food prices and living costs. Director‑General Adewale‑Smatt Oyerinde emphasized that “macroeconomic stability will only have meaning when Nigerians experience tangible relief through lower food and living costs.”
The interest‑rate cut is a notable development in Nigeria’s economic landscape, and its effects will be closely monitored in the coming days. While the decision is seen as a positive step, it remains to be seen whether it will substantially lower the cost of living, a primary concern for many Nigerians.
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