The Central Bank of Nigeria has cut its benchmark interest rate by three percentage points, slashing the Monetary Policy Rate (MPR) from 26.5 per cent to 23 per cent, in a move that has drawn mixed reactions from economic stakeholders.
CBN Governor, Olayemi Cardoso, announced the decision at the end of the 307th Monetary Policy Committee (MPC) meeting in Abuja, describing it as a reset to align policy with current financial market realities rather than a shift in the bank’s overall monetary stance.
As part of the changes, the MPC also recalibrated the standing facilities’ corridor to +50/-300 basis points around the MPR, while retaining the Cash Reserve Requirement at 45 per cent for deposit money banks, 16 per cent for merchant banks, and 75 per cent for non-TSA public sector deposits.
Cardoso said the divergence between the MPR and prevailing market rates had weakened monetary policy transmission, and that the reset — supported by the ongoing adoption of NOFA as a transaction-based benchmark — was designed to restore the MPR’s role as the primary signal of monetary policy. He stressed that improving macroeconomic conditions, including moderating inflation, exchange rate stability and stronger FX liquidity, gave the committee room to act without undermining disinflation efforts.
The CBN governor, who marked three years in office the same day, put Nigeria’s gross external reserves at $55.25 billion as of September 18 — the highest in 18 years — sufficient to cover about 11.3 months of imports. He credited the figure, along with exchange rate stability achieved through the unification policy, as key achievements of his tenure, noting that fuel and FX subsidies had together consumed up to 5 per cent of GDP before his reforms.
Reactions to the rate cut were split. Dr Muda Yusuf, CEO of the Centre for the Promotion of Private Enterprise (CPPE), called the cut a timely and necessary realignment given the gap between the old MPR, inflation and money-market rates, and said it should ease financing costs for sectors like manufacturing, agriculture and construction — though he cautioned that its real impact would depend on transmission through the banking system.
Fiona Ahimie, President of the Chartered Institute of Stockbrokers (CIS), said the cut could push yields on government securities lower and shift investor interest toward longer-dated bonds and equities. She noted the banking sector could see mixed effects, as faster repricing of loans than deposits may pressure lenders’ net interest margins, while foreign portfolio flows would continue to hinge on exchange rate stability and Nigeria’s broader macro outlook.
Professor Uche Uwaleke, President of the Capital Market Academics of Nigeria, described the cut as justified by moderating inflation, exchange rate stability and reserve accretion, calling it a welcome move that builds on the recent fiscal-monetary collaboration agreement between the Finance Minister and the CBN governor.
Dr Ubah Jeremiah, Chief Investment Officer of VNL Capital Asset Management, called the 350-basis-point cut a bigger-than-expected move, noting that market consensus had priced in a more cautious 50–100 basis point reduction.
Not everyone was convinced. Lucky Amiwero, President of the National Council of Managing Directors of Licensed Customs Agents (NCMDLCA), argued the new rate is still too high to meaningfully help businesses reliant on bank credit, pointing to the removal of fuel subsidies and currency floatation as factors already squeezing operators. He also cited poor infrastructure — electricity and roads — as compounding the cost of doing business, and called on the CBN and government to do more to widen access to affordable credit.
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