Barbara Bako, Abuja.
The Central Bank of Nigeria (CBN) has reduced its benchmark interest rate by 350 basis points to 23 per cent, citing easing inflation, exchange rate stability and stronger external reserves as signs that the economy is becoming more resilient.
CBN Governor and Chairman of the Monetary Policy Committee (MPC), Olayemi Cardoso, announced the decision at the end of the committee’s meeting in Abuja.
The MPC also recalibrated the standing lending and deposit facilities corridor to +50/-300 basis points around the Monetary Policy Rate (MPR), while retaining the Cash Reserve Ratio at 45 per cent for deposit money banks, 16 per cent for merchant banks and 75 per cent for non-TSA public sector deposits.
Cardoso explained that the move is an operational reset designed to improve monetary policy transmission and should not be seen as a shift from the CBN’s restrictive policy stance.
He said the committee acted because inflation has continued to moderate, foreign exchange market liquidity has improved, external reserves have risen to $55.25 billion the highest level in 18 years and investor confidence has strengthened.
Responding to questions after the MPC meeting, Cardoso said the CBN is prepared to manage election-related liquidity and will deploy monetary tools to mop up excess cash if necessary.
He also described restoring stability to the economy as one of the CBN’s biggest achievements over the past three years, pointing to exchange rate reforms, banking sector recapitalisation and declining inflation as key milestones.
Reacting to the decision, Professor Uche Uwaleke said the rate cut is justified by moderating inflation, exchange rate stability, improved foreign exchange liquidity and growing external reserves.
He added that the decision is a welcome development following the recently signed Memorandum of Understanding between the Federal Ministry of Finance and the CBN to strengthen fiscal and monetary policy coordination.
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