The Central Bank of Nigeria has reduced the Monetary Policy Rate (MPR) to 27%.
On Tuesday,the CBN announced the update, saying,
“The Monetary Policy Committee (MPC) at its 302nd meeting voted unanimously to adjust policy parameters as follows:
Monetary Policy Rate (MPR): Reduced by 50 basis points, from 27.5% to 27%.”Cash Reserve Ratio (CRR): Reduced to 45% for Commercial Banks and retained at 16% for Merchant Banks.
“Liquidity Ratio (LR): Retained at 30%. Asymmetric Corridor: Adjusted to +250/-250 basis points around the MPR.
In July, the CBN retained the Monetary Policy Rate (MPR) at 27.50% for the third time in 2025.
This decision was reached at the 301st Monetary Policy Committee (MPC) meeting of the apex bank.
“The Monetary Policy Committee (MPC) voted unanimously to retain the Monetary Policy Rate (MPR) at 27.50%; retain the Cash Reserve Ratio (CRR) at 50% for Deposit Money Banks and 16% for Merchant Banks,” it said.
“The Committee retains the Liquidity Ratio (LR) at 30% and the Asymmetric Corridor at +500/-100 basis points around the MPR,” the CBN noted.
In February, the Central Bank of Nigeria (CBN) retained the Monetary Policy Rate (MPR) at 27.50% following its 299th Monetary Policy Committee (MPC) meeting.
The committee also maintained the Cash Reserve Ratio (CRR) at 50% for Deposit Money Banks and 16% for Merchant Banks, the Liquidity Ratio at 30%, and the Asymmetric Corridor at +500/-100 basis points around the MPR.
The CBN had previously raised the MPR in November 2024 from 27.25% to 27.50%, making borrowing costlier.
The increase was aimed at curbing inflation and supporting the naira.
What does the interest rate mean for the economy?
The drop in interest rate to 27% means that the burden of borrowing has been eased.
At 27.5%, an individual who borrows N10,000 from a bank pays N12,750 (interest of N2,750).
But with 27%, the repayment fee is cut by N50 to N12,700.Interest rate cuts help promote economic growth.
The main way they do this is by making it easier for businesses to grow.
With ease in interest rates, more Nigerians can start a new business on a loan without fear of high returns.
In addition, more businesses propel a robust economy and high purchasing power for individuals.
