CBN Cuts Interest Rate to 27% as Inflation Eases for Fifth Straight Month

|By Adejumo Adekunle

The Central Bank of Nigeria (CBN) has slashed its benchmark interest rate from 27.5 percent to 27 percent, the first cut in over a year, as inflation continues to moderate.

CBN Governor, Olayemi Cardoso, disclosed the decision on Tuesday at the end of the two-day 302nd Monetary Policy Committee (MPC) meeting in Abuja. He said the move, unanimously backed by the committee, followed five consecutive months of inflation decline, with the rate dropping to 21.12 percent in August.

Alongside the rate cut, the MPC adjusted the Cash Reserve Ratio (CRR) to 45 percent for Deposit Money Banks and 16 percent for Merchant Banks, while retaining the Liquidity Ratio at 30 percent. The asymmetric corridor was set at +250/-250 basis points around the Monetary Policy Rate (MPR).

The last time the CBN reduced its benchmark rate was in May 2023, when it was trimmed from 18 percent to 17.5 percent. Since then, manufacturers and industry stakeholders have persistently lobbied for downward adjustments to ease borrowing costs and reduce production expenses.

Nigeria’s economy showed signs of resilience in the second quarter of 2025, growing by 4.23 percent compared to 3.13 percent in the previous quarter. While agriculture, services, industry, and the oil sector expanded, sectors like manufacturing, trade, ICT, and motor assembly contracted.

Despite the latest adjustment, Nigeria still grapples with one of the highest interest rates and inflation levels in Africa. In comparison, Ghana recently cut its rate by 350 basis points to 21.5 percent with inflation at 11.5 percent, while South Africa maintains a 7 percent rate and 3.3 percent inflation.