CBN eases MPR by 50 basis points to 26.5%.

The Central Bank of Nigeria (CBN) has announced a reduction in the Monetary Policy Rate (MPR) by 50 basis points, bringing it down to 26.5 percent. This move reflects the Bank’s ongoing effort to stimulate economic activity and provide some relief to businesses and consumers facing persistent high borrowing costs in the economy.

In addition to adjusting the MPR, the CBN has maintained the structure of its standing facilities corridor, keeping it at +50 to -450 basis points. This corridor essentially sets the interest rates at which banks can borrow from or deposit funds with the central bank, helping to guide liquidity and stabilize short-term money market rates.

Furthermore, the Cash Reserve Requirements (CRR) for banks remain unchanged. Deposit money banks continue to hold 45 percent of their deposits with the CBN, merchant banks are required to maintain 16 percent, and non-Treasury Single Account public sector deposits are subject to a 75 percent reserve requirement. These measures are designed to manage liquidity in the banking system while ensuring that funds remain available to support lending to critical sectors of the economy.

The decision to ease the MPR comes after careful consideration by the Monetary Policy Committee (MPC), which evaluates domestic and global economic conditions, inflation trends, and financial stability indicators. By lowering the policy rate, the CBN aims to reduce the cost of credit, encourage investment, and support economic growth, particularly in areas affected by high inflation and constrained access to financing.

Experts note that this policy adjustment may also help to ease some pressure on households and businesses, making loans for consumption and investment slightly more affordable. At the same time, keeping other instruments such as the CRR and standing facilities unchanged signals that the central bank remains cautious about inflationary risks and liquidity management.

Overall, the adjustment reflects a careful balancing act by the CBN—seeking to stimulate growth without undermining financial stability in a complex economic environment characterized by high inflation, currency volatility, and ongoing global economic uncertainties.