CBN Slashes Interest Rate To 27%, Banks Brace For New Cash Reserve Rules

The Central Bank of Nigeria (CBN) has lowered its benchmark interest rate to 27 per cent, down from 27.5 per cent in July, as part of its ongoing strategy to stabilise the economy.

In addition, the Monetary Policy Committee (MPC) announced new adjustments to banks’ cash reserve requirements. The decision reflects continued disinflation and a positive economic outlook, according to the Committee.

The announcement came during the MPC’s 302nd meeting, held on September 22 and 23, 2025, where all 12 members voted in favour of the rate reduction. Under the revised policy, the Cash Reserve Requirement (CRR) for commercial banks has been cut to 45 per cent, while merchant banks’ CRR remains at 16 per cent. The MPC also introduced a 75 per cent CRR on non-TSA public sector deposits to tighten controls on idle public funds. Meanwhile, the liquidity ratio remains unchanged at 30 per cent.

CBN Governor Olayemi Cardoso told journalists that the rate cut is driven by positive economic signals. “The committee’s decision to lower the monetary policy rate reflects sustained disinflation over the past five months, projected declines in inflation for the remainder of 2025, and the need to support economic growth,” he said.

Cardoso added that the asymmetric corridor around the MPR has been maintained at +260 and -250 basis points to guide liquidity management and signal the Bank’s cautious stance on market volatility.

The CBN emphasized that the adjustments aim to consolidate progress in curbing inflation while promoting credit expansion for productive sectors. The MPC will meet again in November to evaluate the impact of these measures on inflation, growth, and financial stability.