BREAKING: CBN Cuts Interest Rate to 23% as Inflation Eases

The Central Bank of Nigeria (CBN) has lowered the Monetary Policy Rate (MPR) to 23 per cent, signalling a shift in its approach to managing the economy.

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The reduction was approved by the Monetary Policy Committee (MPC) after it assessed recent movements in inflation, economic activity and conditions in the financial market.

CBN Governor, Olayemi Cardoso, announced the new rate on Tuesday in Abuja after the committee’s 307th meeting. The decision brings the benchmark rate down from 26.5 per cent.

According to the latest inflation figures, Nigeria’s headline inflation dropped slightly from 15.43 per cent in July to 15.39 per cent in August. Food inflation also recorded a decline over the same period.

The latest adjustment means the CBN has reduced the rate by 3.5 percentage points, a move that could eventually affect the interest rates offered by commercial banks to borrowers.

However, the MPC left the Cash Reserve Requirement (CRR) unchanged at 45 per cent for Deposit Money Banks and 16 per cent for Merchant Banks.

The committee also maintained the 75 per cent CRR applicable to non-Treasury Single Account public-sector deposits.

Furthermore, the Standing Facilities Corridor was adjusted to +50 and -300 basis points around the new MPR.

The CBN’s policy rate influences the broader cost of credit in the economy. However, the extent to which the latest reduction translates into cheaper loans will depend on how financial institutions adjust their lending rates.

The apex bank is expected to provide more details on the rationale behind the decision in its communiqué from the MPC meeting.