By Peace Udugba
The Central Bank of Nigeria (CBN) on Tuesday began a gradual easing of its monetary policy, cutting its benchmark interest rate—known as the Monetary Policy Rate (MPR)—by 50 basis points to 27 per cent, marking its first rate reduction in five years.
CBN Governor, Olayemi Cardoso, announced the decision at a press briefing following the 302nd Monetary Policy Committee (MPC) meeting in Abuja, citing five consecutive months of disinflation and the need to support ongoing economic recovery efforts.
He stated, “The Committee decided as follows: reduce the monetary policy rate by 50 basis points to 27 per cent.”
In addition, the CBN adjusted the asymmetric corridor around the MPR to +250/-250 basis points, reduced 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 left the Liquidity Ratio unchanged at 30 per cent. The bank also introduced a 75 per cent CRR on non-public sector deposits.
The last time the CBN cut the MPR was in September 2020, lowering it from 12.5 per cent to 11.5 per cent to cushion the economic impact of the COVID-19 pandemic.
Since then, the bank had maintained a tightening stance, raising rates to combat inflation. Most recently, in September 2024, the MPR was increased to 27.25 per cent from 26.25 per cent in May 2024 to stabilise inflation and support the exchange rate.
