The Central Bank of Nigeria (CBN) has provided clarity on its decision to reduce the Monetary Policy Rate (MPR) by 50 basis points, lowering it from 27.5% to 27%.
The move, announced at the Monetary Policy Committee (MPC) meeting held last week, reflects the apex bank’s response to easing inflation and its commitment to supporting economic recovery.
In a Frequently Asked Questions on its official website, the CBN noted that the rate cut was driven by a sustained decline in inflation over the past five months and expectations of further moderation through the remainder of the year.
“The MPC lowered the MPR by 50 basis points to 27% in response to the sustained decline in inflation over the past five months and in anticipation of further decline in inflation for the remainder of 2025,” the bank stated.
“Also, the reduction in the policy rate by the MPC would help to support economic recovery efforts of the government without undermining macroeconomic stability.”
In addition to the rate cut, the CBN announced a revision to the Standing Facilities corridor, narrowing it from +500/-100 basis points to a symmetric +250/-250 basis points around the MPR.
This adjustment marks a shift from an asymmetric to a symmetric corridor, aimed at improving liquidity management and reducing volatility in overnight interest rates.
“Standing facilities refer to monetary policy instruments that help the CBN to provide or mop overnight liquidity in the banking system,” the bank explained.
The two key instruments—the Standing Lending Facility (SLF) and the Standing Deposit Facility (SDF)—allow banks to borrow or deposit excess liquidity overnight at designated rates.
“This implied that the CBN is currently operating a symmetric corridor in contrast to the asymmetric type,” the statement added.
The central bank emphasized that the corridor adjustment is designed to enhance interbank market efficiency and strengthen monetary policy transmission.
“Overall, this would encourage more active interbank trading and enhance monetary policy transmission,” the CBN concluded.
These measures, the CBN said, were carefully balanced to sustain ongoing disinflation efforts while ensuring the banking sector has adequate liquidity to support credit expansion and economic growth.