The Central Bank of Nigeria (CBN) has announced its decision to cut the interest rate to 27%.
The CBN explained that the decision was reached after cutting 50 basis points, bringing the Monetary Policy Rate (MPR) to 27% from 27.5%.
The CBN Governor, Olayemi Cardoso, made this announcement on Tuesday, September 23, 2025.
Cardoso said the decision to cut the interest rate to 27% was reached by the CBN’s Monetary Policy Committee (MPC).
The Committee has also introduced a 75 per cent cash reserve requirement on non-TSA public sector deposits for enhanced liquidity management.
He added that the decision aims to ease borrowing costs and encourage investment amid Nigeria’s evolving economic landscape.
Cardoso also confirmed that the interest rate cut comes as the bank seeks to balance inflation control with economic expansion.
Meanwhile, the asymmetric corridor around the MPR was retained at +260 and -250 basis points, providing a framework for liquidity management and signaling the CBN’s cautious approach toward market volatility.
He said: “The MPC expressed satisfaction with the prevailing macroeconomic stability evidenced by the improvements in several indicators such as sustained disinflation, improved output growth, stable exchange rate, and robust external reserves.
“It particularly noted the increased momentum of disinflation in August 2025, being the highest in the past five months.
“This deceleration, underpinned by monetary policy tightening, exchange rate stability, and increased capital inflow surplus current account balance, has helped to broadly anchor inflation expectations.
“Other factors that contributed to the deceleration include the continued moderation in the price of PMS and the notable increase in crude oil production.
“In the view of the committee, the stability in the macroeconomic environment offered some headroom for monetary policy to support economic growth and recovery.”
“Notwithstanding the consistent deceleration in inflation, the Committee said it observed the persistent reduction of excess liquidity in the banking system, resulting largely from fiscal releases emerging from improving revenues.
“Being mindful of the need to preserve the prevailing macroeconomic stability, the MPC noted the risk posed by the excess liquidity in the banking system.
“Members noted that the effective functioning of the inter-banking system is critical to enhance transmission of the monetary policy.
“This, therefore, informed the decision to adjust the width of the standing facilities corridor to boost inter-banking market transactions and the stability of the market.”
Pan-Atlantic Kompass reports that this is the first time the CBN has reduced its benchmark interest rate since the COVID-19 pandemic in 2020.
This adjustment ends a streak of three rate pauses following hikes throughout 2024.
Pan-Atlantic Kompass also reports that the CBN’s decision to cut the interest rate to 27% came after Nigeria’s Gross Domestic Product (GDP) grew by 4.23% on a year-on-year basis in the second quarter of 2025, according to data released by the National Bureau of Statistics (NBS) on Monday.
The latest figures showed an improvement from the 3.48 per cent growth recorded in the same quarter of 2024, indicating continued recovery and resilience in the economy.
According to the report, the agriculture sector grew by 2.82 per cent in real terms during the period under review, an increase from the 2.60 per cent recorded in the second quarter of 2024.
The industry sector also showed strong performance, growing by 7.45 per cent, compared to 3.72 per cent in the corresponding period of the previous year. Meanwhile, the services sector recorded a real growth of 3.94 per cent, slightly up from the 3.83 per cent posted in the second quarter of 2024.
