The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) has reduced the Monetary Policy Rate (MPR) by 50 basis points, lowering it from 27.5 per cent to 27 per cent.
The CBN Governor, Olayemi Cardoso, disclosed this while briefing journalists on the outcome of the 302nd MPC meeting held in Abuja on Tuesday.
Cardoso further announced key adjustments to banks’ cash reserve requirements, noting that commercial banks will now maintain a higher benchmark of 45 per cent, while merchant banks will continue at 16 per cent. In addition, a new 75 per cent cash reserve ratio was introduced on non-TSA public sector deposits, a move analysts believe is aimed at curbing excess liquidity in the banking system.
Explaining the rationale for the decisions, Cardoso said the MPC was guided by the “recent moderation in inflation,” which created room for a cautious reduction in interest rates while maintaining a tight hold on liquidity.
Economic observers say the cut in interest rates could ease borrowing costs for businesses and households, stimulate investment, and encourage economic activity. However, the simultaneous tightening of reserve requirements is seen as a balancing act to prevent inflationary pressures from resurging.
Financial analysts also note that while the reduction is relatively modest, it signals the CBN’s intention to gradually shift towards growth-supportive policies, especially at a time when businesses are struggling with high operating costs and limited access to credit.
The CBN governor stressed that the committee remains committed to ensuring price stability, financial system resilience, and sustainable growth in the Nigerian economy.
