The Central Bank of Nigeria (CBN) has lowered its benchmark Monetary Policy Rate (MPR) by 50 basis points to 27 percent, a move aimed at easing borrowing costs for small businesses and households across the country. Announcing the decision after the 302nd meeting of the Monetary Policy Committee (MPC), the bank said the rate cut is part of a broader strategy to stimulate economic recovery and support sectors that drive job creation and consumer spending.
Explaining the policy shift on Television Continental, the CBN’s Director of Monetary Policy, Dr. Victor Oboh, said the reduction would help channel credit to growth-enhancing industries, particularly small and medium-scale enterprises (SMEs). “When the MPR is lowered, commercial banks can access funds at reduced costs and are expected to lower interest rates for households and businesses,” he noted.
The MPC also adjusted key regulatory parameters: the Standing Facilities corridor was moved to +250/-250 basis points; the Cash Reserve Ratio (CRR) for commercial banks rose to 45 percent while merchant banks retained 16 percent; and a 75 percent CRR was introduced on non-TSA public sector deposits. The liquidity ratio was kept unchanged at 30 percent. According to Dr. Oboh, these measures are designed to balance inflation control with credit expansion to productive sectors.
Beyond businesses, households are also expected to benefit from lower loan rates, reduced production costs, and potentially lower consumer prices. “Competitiveness will make banks reprice rates. Many banks are interested in funding small businesses that have good repayment capacity. Targeted sectors will benefit from lower borrowing costs,” Dr. Oboh said. The CBN projects that as banks pass on cheaper credit, purchasing power will rise and the cost of living will ease.
Despite the policy easing, the CBN insists the naira remains well supported by “robust fundamentals,” including external reserves above $43 billion, stable exchange rates, and slowing inflation. Dr. Oboh described the rate cut as a “balancing act” designed to create room for growth while maintaining monetary stability. He added that the bank would continue to rely on data and global trends when making future decisions, expressing optimism about Nigeria’s economic outlook for the remainder of 2025.
source: punch