By Cyril Ogar, Abuja
After three years, the Central Bank of Nigeria, CBN, Monetary Policy Committee, MPC, yesterday, cut the interest rate from 27.50% to 27% amid decline in inflation rate.
The interest rate downward adjustment was in May 2023, when it was cut from 18% to 17.5%.
CBN Governor, Dr. Yemi Cardoso, who made the interest rate cut public at a press conference after a two-day meeting of the MPC in Abuja, said members of the Committee unanimously agreed to the cut due to the country’s inflation decline in the past five months.
Besides, the 302nd edition of the MPC witnessed the adjustment of Cash Reserve Ratio, CRR, to 45% for Deposit Money Banks and 16% for Merchant Banks.
It also adjusted the asymmetric corridor at +250/-250 basis points around the MPR as well as retained the liquidity ratio, LR, at 30%.
It would be recalled that earlier inflation moderated in August to 21.12% for the fifth consecutive time just as Nigeria’s economy grew by 4.23% in the second quarter of 2025.
Nigeria Employers’ Consultative Association, NECA, in its reaction to the cut commended the Central Bank of Nigeria for reducing the Monetary Policy Rate, MPR, while warning about potential limitations of the decision.
NECA Director-General, Mr Adewale-Smatt Oyerinde, stated in Abuja, yesterday that the modest rate cut must translate into real economic benefits for households and businesses across Nigeria to have meaningful impact.
Oyerinde, noted inflation had steadily declined, with headline inflation dropping to 20.12% in August from 21.88% in July, based on data from the National Bureau of Statistics.
“For over five months, inflationary pressures have eased.
“This provides critical space for policymakers to balance price stability with the urgent need to stimulate real economic growth”, Oyerinde said.
He warned that the impact of the rate cut would depend on effective transmission mechanisms.
He said without this, the intended boost to credit access and economic expansion might not materialise.
“If credit costs are lowered, businesses can access financing, expand operations, and create jobs.
“However, high cash reserve ratios may continue to constrain lending and undermine these expected outcomes”, he said.
In spite of overall inflation easing, Oyerinde highlighted that food inflation remained persistently high, putting pressure on household budgets and eroding the disposable income of average Nigerian families.
“Macroeconomic stability only becomes meaningful when Nigerians feel tangible relief, especially through lower food and living costs”, he emphasised, urging deeper economic reforms beyond monetary policy adjustments.
Oyerinde, then called on the government to complement monetary actions with fiscal reforms addressing exchange rate instability, insecurity in farming communities, and inefficiencies in energy and transport infrastructure.
“It is time to complement price stability with deliberate growth stimulation.
“This is the message Nigerians need right now to find relief from the ongoing cost-of-living crisis”, Oyerinde said.
Similarly, Centre for the Promotion of Private Enterprise, CPPE, has commended the Central Bank of Nigeria and its Monetary Policy Committee for measures aimed at easing credit conditions in the economy.
CPPE’s Chief Executive Officer, Dr. Muda Yusuf, said in a statement yesterday that the decision marked a clear policy shift toward supporting growth and investment after a prolonged phase of aggressive monetary tightening to curb inflation.
He was reacting to the outcome of the 302nd meeting of the MPC held in Abuja.
Yusuf, described the MPC’s decision as a strategic and well-timed shift from a phase of stabilisation to one of accelerating growth.
He said if sustained and complemented by fiscal and structural reforms, the measures would stimulate growth, create jobs, boost private sector performance, and enhance government revenues through an expanded tax base.
“The CPPE regards this as a step in the right direction toward building a more resilient, inclusive and growth-oriented Nigerian economy”, Yusuf said.
According to him, the policy easing comes at a time when Nigeria has recorded five consecutive months of declining inflation, an indication that previous tightening measures were yielding results.
“Having restored a measure of macroeconomic stability and slowed inflationary pressures, the MPC’s pivot toward growth is both logical and timely”, he said.
Yusuf, noted that high interest rates in recent quarters had constrained private sector credit, raised the cost of funds, and slowed business expansion.
“By lowering the MPR and CRR, the CBN is deliberately working to improve liquidity conditions, reduce borrowing costs and unlock capital for productive sectors of the economy”, he said.
He explained that the move would not only improve credit conditions and encourage new investments but also strengthen financial inter-mediation and ensure macroeconomic stability.
While welcoming the monetary easing, Yusuf stressed that fiscal policy must play a complementary role to fully unlock Nigeria’s growth potential.
He urged fiscal authorities to sustain consolidation efforts to maintain macroeconomic stability, preserve investor confidence, and prioritise critical infrastructure investment to reduce production and logistics costs.
According to him, government must also strengthen the regulatory and institutional framework to foster a business-friendly environment, while addressing security challenges that continue to constrain private sector investment and rural productivity.
