The Central Bank of Nigeria (CBN) on Tuesday began a gradual easing, cutting its benchmark interest rate, known as the Monetary Policy Rate (MPR), for the first time in five years by 50basis points to 27 per cent, in a bid to stimulate economic growth amid slowing inflationary pressure.
The CBN also adjusted the asymmetric corridor around the MPR at +250/-250 basis points, adjusted the Cash Reserve Ratio (CRR) for Deposit Money Banks to 45 per cent from 50.00 per cent and retained the Merchant Banks at 16 per cent, and left the Liquidity Ratio unchanged at 30.0 per cent. Also, the apex bank has introduced 75percent CRR for non-public sector deposits.
The decision was announced by Olayemi Cardoso, CBN governor, not long after the conclusion of the two-day Monetary Policy Committee (MPC) meeting in Abuja, saying the decision was based on sustained disinflation in five months to support the effort of the economic recovery.
The last time the CBN reduced the MPR was in September 2020, when it was lowered from 12.5 per cent to 11.5 per cent to support the economy during the COVID-19 pandemic.
Since that time, the apex bank has mostly pursued a tightening cycle, raising interest rates in response to elevated inflation. Most recently, in September 2024, the MPR was hiked to 27.25 per cent from 26.25 per cent in May of the same year, to rein in inflation and support exchange rate stability.