CBN Cuts Interest Rate to 27%: A Boost for Economic Growth

CBN Cuts Interest Rate to 27%: A Boost for Economic Growth

The Central Bank of Nigeria (CBN) has reduced the Monetary Policy Rate (MPR) by 50 basis points to 27%, marking a significant shift in the country’s monetary policy stance. This decision, made by the Monetary Policy Committee (MPC) at its 302nd meeting, aims to support economic growth while maintaining price stability .

The CBN has lowered the interest rate from 27.5% to 27%, effective immediately.
The Cash Reserve Ratio (CRR) for commercial banks has been reduced to 45%, while that of merchant banks remains at 16%.
The liquidity ratio has been left unchanged at 30%.
The asymmetric corridor around the MPR has been retained at +260 and -250 basis points.

The CBN’s decision to lower the interest rate was based on several factors, including .
The country has recorded sustained disinflation over the past five months, with inflation projections indicating a decline for the rest of 2025.
The MPC aims to support economic growth and recovery while maintaining price stability.
The CBN has expressed satisfaction with the prevailing macroeconomic stability, citing improvements in several indicators such as sustained disinflation, improved output growth, stable exchange rate, and robust external reserves.

The interest rate cut is expected to have a positive impact on the economy, including .
Lower interest rates could lead to increased borrowing and investment, stimulating economic activity.
The move is anticipated to support economic growth and recovery, particularly in the productive sectors.
The CBN’s cautious approach aims to maintain stability in the macroeconomic environment while providing room for sustainable growth.

The CBN’s decision to reduce the interest rate to 27% marks a significant step towards supporting economic growth and recovery. With a cautious approach to monetary policy, the CBN aims to balance inflationary pressures with the need to stimulate economic activity. As the economy navigates complex challenges, the CBN’s policy adjustments will be closely watched to ensure stability and growth .