By Joshua Tosin Ogunsakin 
In a move set to ease borrowing costs and stimulate business growth, the Central Bank of Nigeria (CBN) on Tuesday cut the Monetary Policy Rate (MPR) from 27.50 percent to 27 percent.
CBN Governor Olayemi Cardoso announced the decision at the end of the two-day 302nd Monetary Policy Committee (MPC) meeting in Abuja. He said the unanimous decision reflects a steady decline in Nigeria’s inflation over the last five months.
The MPC also made key adjustments to banking ratios. The Cash Reserve Ratio (CRR) was revised to 45 percent for Deposit Money Banks and 16 percent for Merchant Banks. The asymmetric corridor was set at +250/-250 basis points around the MPR, while the Liquidity Ratio (LR) remains at 30 percent.
This is the first interest rate cut since May 2023, when the CBN trimmed the rate from 18 percent to 17.5 percent. The reduction responds to calls from manufacturers and industrial operators seeking lower financing costs to reduce the cost of production in Nigeria.
Recent data show that inflation moderated to 21.12 percent in August, the fifth consecutive month of decline. Meanwhile, Nigeria’s GDP grew by 4.23 percent in Q2 2025, up from 3.13 percent in the previous quarter.
While sectors like agriculture, services, oil, and industry saw growth, manufacturing, trade, ICT, and motor assembly experienced contraction.
Nigeria’s interest rates and inflation remain high compared to neighboring countries. Ghana recently reduced its rate to 21.5 percent with 11.5 percent inflation, while South Africa maintains a 7 percent rate and 3.3 percent inflation.
The latest decision by the CBN reflects a forward-looking, analytical approach to managing the economy, designed to ease borrowing, support businesses, and foster steady growth across key sectors in Nigeria.