- Decision
- Lower
- Rate change
- 50 bps
- monetary policy rate
- 27%
The Monetary Policy Committee (MPC) of the Central Bank of Nigeria cut the Monetary Policy Rate by 50 bp to 27.00 percent on 23 September 2025, pointing to five consecutive months of disinflation, expectations of further price easing through year-end and room to reinforce economic recovery. After holding the rate at 27.50 percent since February 2025, the MPC also narrowed the standing-facilities corridor to ±250 bp, reduced the commercial-bank cash-reserve ratio to 45 percent (merchant-bank CRR retained at 16 percent) and imposed a 75 percent CRR on non-TSA public-sector deposits while leaving the 30 percent liquidity ratio unchanged to tighten excess liquidity and improve policy transmission. Headline inflation fell to 20.12 percent y/y in August from 21.88 percent in July, and Q2 real GDP growth accelerated to 4.23 percent from 3.13 percent in Q1, supported by a sharp rebound in oil output; fourteen banks have already met the new recapitalisation requirement, underscoring sector resilience. Gross external reserves increased to USD 43.05 bn by 11 September from USD 40.51 bn end-July, giving 8.3 months of import cover, while the current-account surplus widened to USD 5.28 bn in Q2 amid a stable naira. The MPC noted a modestly improving global growth outlook but flagged ongoing geopolitical and trade tensions, and said it will maintain a proactive, data-driven stance to safeguard disinflation and macro-financial stability while supporting recovery.
Rate evolution
From July 2025 to July 2026, the Central Bank of Nigeria eased the Monetary Policy Rate by 100 basis points to 26.5 per cent, moving from an initial hold to cuts interrupted by pauses as disinflation progressed. The shift was driven first by a need to sustain disinflation despite persistent underlying price pressures and global trade and geopolitical uncertainty, then by stronger macroeconomic stability, with falling headline, food and core inflation, exchange rate stability, firmer reserves and capital inflows, improved food supply, moderating Premium Motor Spirit prices and resilient growth creating room to support recovery even as double-digit inflation and excess liquidity kept policy cautious.
After cutting by 50 basis points in February 2026 on a balanced assessment of risks, the Committee held in May as inflation rose for a second month, judging the pickup transitory and linked to Middle East-driven energy and logistics costs, while arguing that tightening, exchange rate stability, reserve buffers, enhanced food supply and banking-system resilience should restore disinflation. It retained the policy rate again in July after headline inflation eased marginally in June, ending three consecutive months of uptick, as renewed hostilities in the Middle East heightened uncertainty and upside risks to inflation through energy prices, even as core inflation moderated on exchange rate stability, reserves increased, policy coordination helped moderate the external shock and banking recapitalisation improved financial-system resilience, leaving policy cautious, vigilant and data-driven.
In September 2026, the Committee reset the Monetary Policy Rate at 23 per cent and recalibrated the Standing Facilities Corridor to 50 basis points above and 300 basis points below the policy rate, describing the measures as an operational realignment rather than a change in stance after divergence between the policy rate and market rates weakened transmission. It judged that three consecutive months of declining headline inflation, robust external reserve buffers, improved external sector fundamentals and stronger investor confidence provided headroom for the reset without undermining disinflation, while flagging prolonged Middle East tensions and election-related spending as upside risks and keeping future decisions data-dependent.