BREAKING: CBN reduces interest rate for first time in five years

The Central Bank of Nigeria (CBN) has reduced interest rates by 50 basis points from 27.5 per cent to 27 per cent.

The Central Bank Governor, Olayemi Cardoso, made the disclosure while briefing the media on the outcome of the 302nd Monetary Policy Committee (MPC) meeting in Abuja, on Tuesday.

Cardoso also announced that the cash reserve requirement for commercial banks is adjusted to 45 per cent while that of merchant banks is retained at 16 per cent

The bank also introduced a 75 per cent cash reserve ratio on non-TSA public sector deposits.

The committee, however, adjusted the asymmetric corridor around the MPR to +250bps/-250bps (previous: +500bps/-100bps) and reduced the CRR for Deposit Money Banks to 45per  cent from the previous 50 per  cent.

The governor explained that the decision of the MPC was premised on the recent moderation in inflation.

Inflation rate in Nigeria eased for the fifth consecutive month, declining sharply by 176basis points to 20.12per cent in August from 21.88 per cent July 2025.

The slowdown was driven by softer price pressures in both food (21.87 per cent vs. July: 22.74 per cent) and core sub-items (20.33 per cent vs. 21.33 per cent).

Meanwhile, before today, the CBN last decreased the benchmark interest rate (Monetary Policy Rate, MPR) in September 2020, when it was reduced by 100 basis points from 12.5% to 11.5%. This was part of efforts to stimulate economic recovery during the COVID-19 pandemic.