BREAKING: Respite for Businesses as CBN Cuts Lending Rate to 27%

The Monetary Policy Committee (PMC) of the Central Bank of Nigeria (CBN) has reduced the the country’s monetary policy rate (MPR) from 27.5% to 27%.

CBN Governor, Olayemi Cardoso announced the rate adjustment at a news conference on Tuesday, September 23, during the committee’s 302nd meeting in Abuja.

Cardoso attributed the interest rate reduction decision to the decline in inflation figures to 20.33% in August, foreign exchange gains and stability of Nigeria’s currency.

BUSINESS METRICS reports that MPR is the baseline interest rate in an economy, which is the foundation upon which interest rates in an economy are built. Banks, equity markets, stock markets, industry and key economic decisions are taken in reference as a baseline guide.

Cardoso further disclosed that the committee adjusted the cash reserve ratio (CRR) to 45%, and retained the liquidity ratio at 30%, which altogether are monetary catalysts to marginally lessen borrowing costs for businesses by financial lending institutions.

“All 12 members of the committee were in decisions of the MPC. The committee decided to reduce the monetary policy rate (MPR) by 50 basis points to 27%,” the CBN governor said.

“Change the asymmetric corridor to +250/-250 around the MPR, reduce the CRR of commercial banks from 50% to 45%.

He disclosed that the CRR of Merchant banks remains at 16%, and it would also introduce a 75% CRR on non-Treasury Single Account (TSA) public sector departments and keep the liquidity ratio unchanged at 30%.

Cardoso noted that the committee’s decision to lower the MPR 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 MPC expressed satisfaction with the prevailing macroeconomic stability, evidenced by the improvements in several indicators,” he said.

“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,” he added.

This deceleration, he said, underpinned by monetary policy tightening, exchange rate stability, increased capital inflows and surplus current account balance, had helped to broadly anchor inflation expectations.

Other factors that contributed to the deceleration, according to Cardoso, include the continued moderation in the price of petrol and the notable increase in crude oil production.