CBN Cuts Interest Rate to 23% After September MPC Meeting
CBN Governor Cardoso
The Central Bank of Nigeria (CBN) has reduced the country’s Monetary Policy Rate (MPR) from 26.5% to 23%, following the conclusion of its September Monetary Policy Committee (MPC) meeting in Abuja. The 350-basis-point reduction was announced by CBN Governor Olayemi Cardoso after the committee’s two-day meeting held on September 21 and 22.
The MPR is the benchmark interest rate used by the CBN to signal its monetary policy direction and influence borrowing costs across the financial system. In addition to the rate cut, the MPC adjusted the Standing Facilities Corridor around the MPR to +50 and -300 basis points.
The committee retained the Cash Reserve Ratio at 45% for Deposit Money Banks and 16% for merchant banks. It also maintained the 75% reserve requirement on non-Treasury Single Account public-sector deposits and left the Liquidity Ratio unchanged at 30%.
The decision represents the CBN’s second rate reduction this year. The bank had lowered the MPR by 50 basis points to 26.5% in February before retaining the rate at subsequent meetings. Cardoso said the decision to reset the MPR and recalibrate the policy corridor was intended to strengthen monetary policy transmission and reinforce the MPR as the CBN’s primary policy signal.
He said the adjustment should not be interpreted as a change in the bank’s underlying monetary-policy stance, but as an operational realignment designed to improve the effectiveness of the policy framework.
The MPC’s decision comes as inflation continues to moderate. Nigeria’s headline inflation rate eased to 15.39% in August from 15.43% in July, according to the National Bureau of Statistics. The CBN also cited improved macroeconomic conditions, including stronger economic growth, relative exchange-rate stability and higher external reserves, as supporting the adjustment.
Nigeria’s gross external reserves stood at about $55.25 billion as of September 18, according to the MPC communiqué.
The CBN will continue to monitor developments in inflation, liquidity and the foreign-exchange market as it pursues price and financial-system stability.
