The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN), has voted to reduce the Monetary Policy Rate (MPR) by 50 basis points to 27.00 per cent- the first reduction in over four years.
Rising from its 302nd meeting on Tuesday in Abuja, the MPC also announced the adjustment of the Standing Facilities corridor around the MPR to +250/-250 basis points, and the CRR for commercial banks to 45 per cent while retaining that of merchant banks at 16 per cent.
CBN Governor, Mr Olayemi Cardoso, who chaired the meeting, announced that the Committee also Introduces a 75 per cent CRR on non-TSA public sector deposits, and Kept the Liquidity Ratio unchanged at 30.00 per cent.
The decision to lower the monetary policy rate, according to the Committee, was predicated on the sustained disinflation recorded in the past five months, projections of declining inflation for the rest of 2025 and the need to support economic recovery efforts.
The Committee after reviewing the key developments in the global and domestic economies including the outlook, expressed satisfaction with the prevailing macroeconomic stability, evidenced by the improvements in several indicators. These include the 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, it said underpinned by monetary policy tightening, exchange rate stability, increased capital inflows, and surplus current account balance, have helped to broadly anchor inflation expectations.
Other factors that contributed to the deceleration, according to the Committee, include the continued moderation in the price of Premium Motor Spirit (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 recovery.
Notwithstanding the consistent deceleration in inflation, the Committee observed the persistent build-up of excess liquidity in the banking system, resulting largely from fiscal releases emerging from improved revenues. Being mindful of the need to preserve the prevailing macroeconomic stability, the MPC noted the risk posed by excess liquidity in the banking system.
Members noted that effective functioning of the interbank market remains critical to enhanced transmission of monetary policy.
This, therefore, informed the decision to adjust the width of the standing facilities corridor to boost interbank market transactions and enhance the stability of the market.
The Committee acknowledged the continued stability of the foreign exchange market and its critical importance in achieving rapid disinflation, and therefore called on the Bank to continue the implementation of policies that would further boost capital inflows and deepen foreign exchange liquidity.
On the financial sector, the MPC noted the continued resilience of the banking system, with most of the financial soundness indicators remaining within their respective prudential benchmarks.
Members also acknowledged the significant progress in the ongoing bank 159 recapitalization exercise, as fourteen (14) banks have fully met the new capital requirement.
They therefore urged the Bank to continue the implementation of policies and initiatives that would ensure the successful completion of the ongoing recapitalisation exercise.
The Committee further noted the successful termination of forbearance measures and waivers on single obligors, which has helped to promote transparency, risk management and long-term financial stability in the banking system.
The MPC reassured the public that the impact of the removal of forbearance is transitory and does not pose any threat to the soundness and stability of the banking system.
The Committee while noting the decline in headline inflation, driven by the decline in both food and core inflation, GDP growth, significant improvement in the performance of the oil sector which grew by 20.46 per cent compared to 1.87 per cent in the preceding quarter, commended the efforts of the Federal Government and called for continued vigilance to strengthen the momentum of security across the country in order to increase oil output and food production.
It informed that the Gross external reserves remained robust at US$43.05 billion on September 11, 2025, compared with US$40.51 billion at end-July 2025 with an import cover of 8.28 months.
While the Q2 2025 current account balance recorded a significant surplus of US$5.28 billion compared with US$2.85 billion in Q1 2025.
