CBN’s MPC Eases Monetary Policy Amid Disinflation and Economic Growth....KINDLY READ THE FULL STORY HERE▶

The 302nd meeting of the Central Bank of Nigeria’s (CBN) Monetary Policy Committee (MPC), held on September 22 and 23, marked a critical juncture in the nation’s monetary policy trajectory. The committee, noting improvements in key economic indicators, opted for a cautious easing of monetary policy. Inflation has trended downward for five consecutive months, oil production has rebounded, foreign reserves have strengthened, and GDP growth has accelerated.

In line with these developments, the MPC reduced the Monetary Policy Rate (MPR) by 50 basis points to 27 percent, adjusted the Standing Facilities corridor to +250/-250 basis points, introduced a 75 percent Cash Reserve Requirement (CRR) on non-TSA public sector deposits, and maintained the liquidity ratio at 30 percent. The committee emphasized that while progress has been made, risks such as excess liquidity and fiscal pressures necessitate prudence.

The MPR cut—the first since the tightening cycle began in 2022—is modest, reflecting the committee’s intention to sustain disinflation momentum while cautiously encouraging lending and investment. With inflation at 20.12 percent in August 2025, the real policy rate remains slightly positive, reinforcing the CBN’s credibility in inflation management. The move also signals a gradual shift toward supporting economic growth, as Nigeria’s GDP expanded by 4.23 percent in Q2 2025, up from 3.13 percent in Q1, driven largely by a recovery in the oil sector.

Inflation data reveal that headline inflation declined from 21.88 percent in July to 20.12 percent in August, supported by moderation in core and food prices. Stronger exchange rates, improved agricultural output, lower PMS prices, and the cumulative effects of prior monetary tightening contributed to this broad-based disinflation. Nevertheless, inflation remains elevated relative to the CBN’s long-term target, highlighting the need for continued vigilance.

The MPC also underscored the significance of oil sector growth for Nigeria’s output resilience, noting a 20.46 percent expansion in the sector year-on-year in Q2. Non-oil sectors, including services, ICT, and trade, sustained moderate growth, though agriculture and manufacturing continue to face structural constraints. Strengthened foreign reserves, which reached $43.05 billion by mid-September, alongside a stable naira in official and parallel markets, have helped anchor inflation expectations and restore investor confidence.

A key innovation in the committee’s liquidity management strategy was the 75 percent CRR on non-TSA public sector deposits, aimed at reducing excess liquidity and preventing inflationary pressures without unduly constraining credit to the private sector. Adjustments to the standing facilities corridor and the termination of certain forbearance measures reinforce financial discipline and support banking sector stability.

CBN Governor Olayemi Cardoso framed the MPC’s actions within Nigeria’s broader economic reform agenda, emphasizing that stability has improved markedly since foreign exchange shortages and low investor confidence plagued the economy two years ago. He highlighted ongoing collaboration with the Ministry of Finance to sustain disinflation and exchange rate stability, while cautioning that political and fiscal developments in the lead-up to the 2026 elections may pose challenges.

Analysts have described the MPR cut and accompanying measures as measured and timely. Dr. Wahab Balogun of Ambosit Capital Managers noted that the move signals a gradual relaxation of monetary conditions without compromising the fight against inflation. Dr. Muda Yusuf of the Centre for the Promotion of Private Enterprise emphasized that the adjustments aim to improve liquidity, reduce borrowing costs, and unlock credit for productive sectors, particularly SMEs, while stressing the importance of complementary fiscal reforms.

The September 2025 MPC decision reflects the CBN’s careful balancing act: easing monetary conditions to support growth while safeguarding disinflation gains. With inflation slowing, reserves rising, growth accelerating, and the banking sector strengthening, Nigeria appears better positioned to enter 2026 with a more resilient financial system, though vigilance remains essential amid structural and external risks.