The Central Bank of Nigeria (CBN) on Tuesday reduced its benchmark interest rate, the Monetary Policy Rate (MPR), by 50 basis points to 27 per cent the first cut in five years in a move aimed at stimulating economic growth amid slowing inflation.
The apex bank also adjusted the asymmetric corridor around the MPR to +250/-250 basis points, lowered the Cash Reserve Ratio (CRR) for Deposit Money Banks to 45 per cent from 50 per cent, retained the CRR for Merchant Banks at 16 per cent, and kept the Liquidity Ratio steady at 30 per cent. In addition, a 75 per cent CRR was introduced for non-public sector deposits.
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CBN Governor Olayemi Cardoso, announcing the decision after a two-day Monetary Policy Committee (MPC) meeting in Abuja, said the move was informed by five consecutive months of disinflation, supporting the economy’s recovery efforts.
The last rate cut was in September 2020, when the MPR was reduced from 12.5 per cent to 11.5 per cent to cushion the economy during the COVID-19 pandemic. Since then, the bank has largely pursued a tightening cycle, raising rates in response to persistent inflation.
As recently as September 2024, the CBN hiked the MPR to 27.25 per cent from 26.25 per cent in May, seeking to curb inflationary pressures and stabilise the naira.
