CBN Cuts Interest Rate to 27%, First Time Since 2020

The Central Bank of Nigeria (CBN) has reduced the Monetary Policy Rate (MPR) by 50 basis points to 27 per cent, its first interest rate cut since the Covid-19 period in 2020. The decision, announced on Tuesday by CBN Governor Olayemi Cardoso, is aimed at easing business conditions and reducing the cost of living for Nigerians.

Alongside the MPR cut, the Monetary Policy Committee (MPC) adjusted the Cash Reserve Ratio (CRR) to 45 per cent for Deposit Money Banks, 16 per cent for Merchant Banks, and introduced a 75 per cent CRR on non-TSA deposits. The asymmetric corridor was maintained at +250/-250 basis points, while the Liquidity Ratio stayed at 30 per cent.

Cardoso explained that the policy shift was based on improved macroeconomic conditions, citing five consecutive months of disinflation, a stable exchange rate at N1,487.37/$, and robust external reserves of $42.13 billion as of September 2022. The announcement boosted the Naira at the money market, though the Nigerian Exchange Market closed on a bearish note, losing N322 billion.

The Centre for the Promotion of Private Enterprise (CPPE) described the move as a positive step toward encouraging growth and investment after years of strict monetary tightening. However, the Nigeria Employers’ Consultative Association (NECA) stressed that real impact will only be felt when Nigerians experience lower food prices and living costs, urging sustained reforms to ease the cost-of-living crisis and attract investors.