Nigeria: Central Bank Cuts Interest Rate

The Central Bank of Nigeria (CBN) has decreased the benchmark interest rate to 23 per cent. Governor Olayemi Cardoso announced this decision at the end of the bank's 307th Monetary Policy Committee (MPC) meeting, held in Abuja from September 21-22. This came after two months of holding the Monetary Policy Rate (MPR) at 26.5 per cent, following a 50-basis-point reduction in February.

The CBN's move is part of a strategic reset aimed at strengthening monetary policy transmission and supporting the country's transition to an inflation targeting framework. The recalibration of the policy corridor, which remains unchanged in terms of its stance, was designed to improve the effectiveness of monetary policy and encourage increased lending into the economy.

Additionally, the committee maintained the Cash Reserve Ratio (CRR) for commercial banks at 45 per cent, the rate for merchant banks at 16 per cent, and the CRR on non-TSA public-sector deposits at 75 per cent. The CBN's decision to cut the interest rate comes as it continues efforts to moderate Nigeria's headline inflation, which has eased to 15.39 per cent in August from 15.93 per cent in May.