Banks’ deposits with the Central Bank of Nigeria (CBN) have risen sharply, reaching N2.9 trillion and marking the highest level since the last Monetary Policy Committee meeting held on November 24 and 25, 2025, in Abuja.
The deposits, placed through the Standing Deposit Facility, signalled a significant shift in liquidity conditions across the financial system as lenders continued to channel excess cash to the apex bank at volumes not seen since the MPC convened.
Data from the CBN showed that deposit placements by Deposit Money Banks climbed by 151.9 percent from N1.2 trillion on November 21, 2025, just before the MPC meeting, to N2.9 trillion on December 4, 2025. The marked increase in funds parked with the regulator reflects a surge in liquidity, largely driven by the CBN’s repayment of maturing Open Market Operation instruments valued at N1.9 trillion within the period under review.
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The breakdown indicated that on October 25, 2025, the apex bank repaid N1.1 trillion to investors, followed by an additional N772 billion OMO repayment on December 2, 2025.
OMO operations, which involve the buying and selling of government securities, remain one of the CBN’s most strategic tools for liquidity control, inflation management, interest rate stabilisation and maintaining monetary stability. With liquidity rising across the system, the data also showed that banks deposited an extraordinary N17 trillion cumulatively over eight days since the MPC meeting while borrowing only N70.2 billion from the CBN’s Standing Lending Facility, underscoring their preference to place excess funds rather than seek liquidity support.
A report by Parthian Partners observed that system liquidity increased slightly by N1.06 billion, bringing the opening balance to N3.04 trillion. As a result, the Overnight Policy Rate closed flat at 22.50 percent, while the Overnight Rate moderated to 22.75 percent, declining by 4 basis points day-on-day.
The CBN has continued to sustain high yields on OMO instruments in order to retain foreign portfolio investors. This strategy contributed to Nigeria attracting $5.2 billion in capital importation in the first quarter of 2025, the highest since the first quarter of 2020, with 74.6 percent of these inflows moving into money market instruments. Analysts at Afrinvest Securities Limited noted that long-dated OMO bills and Treasury bills peaked at 22.7 percent and 18.5 percent respectively in February, adding that “despite inflation easing to 16.1 percent, yields at the recent November PMA remained elevated, with OMO bills clearing at 21.8 percent and NT-Bills clearing at 16.0 percent.”
In the secondary market, FSDH Merchant Bank reported that overall average OMO yield across the curve fell by 3 basis points to 21.31 percent on Wednesday from 21.34 percent the previous day, with short, medium and long-term maturities slipping by 1, 2 and 8 basis points respectively. The OMO 7-Jul-26 instrument posted the strongest buying interest, recording a 14-basis-point drop.
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At its last two-day meeting in Abuja, the MPC retained the Monetary Policy Rate at 27 percent but adjusted the asymmetric corridor around the benchmark rate to +50 and –450 basis points, replacing the +250/–250 basis points corridor maintained since September 2025. The committee explained that this adjustment was necessary to tighten the grip on interest rate movements and reinforce monetary transmission.
The MPC said its decision to hold the policy stance while altering the corridor reflected its commitment to safeguarding the progress achieved in curbing inflation. It reaffirmed its reliance on data-driven assessment in monitoring economic conditions and guiding policy direction in the months ahead.