The Central Bank of Nigeria (CBN) has reduced the benchmark interest rate to 23 per cent, following the latest meeting of its Monetary Policy Committee (MPC).
CBN Governor Olayemi Cardoso announced the decision after the conclusion of the committee’s two-day, 307th MPC meeting held from September 21 to 22 in Abuja.
The rate cut comes after the MPC maintained the Monetary Policy Rate (MPR) at 26.5 per cent during its May and July meetings. The rate had previously been reduced by 50 basis points, from 27 per cent to 26.5 per cent, in February.
Follow PenTalk News
Get breaking news, important updates and the latest stories directly on your phone.
Explaining the latest decision, Cardoso said the committee had approved a reset of the MPR alongside an adjustment to the policy corridor as part of efforts to improve the transmission of monetary policy across the economy.
According to the CBN, the changes are intended to strengthen the role of the MPR in guiding monetary conditions and improve the effectiveness of policy implementation.
The apex bank clarified that the adjustment to the policy corridor does not represent a shift in the overall direction of monetary policy. Instead, it described the move as an operational adjustment designed to improve policy transmission and support Nigeria’s transition towards an inflation-targeting framework.
The MPC also revised the asymmetric corridor around the MPR to +50/-300 basis points.
The adjustment is expected to reduce the incentive for banks to leave excess funds idle with the CBN while encouraging greater credit flow to businesses and other sectors of the economy.
