The Central Bank of Nigeria (CBN) has reduced
the Monetary Policy Rate (MPR) by 50 basis points, lowering it from
27.5% to 27%, in a move aimed at consolidating disinflation gains while
supporting economic recovery.
The decision was announced after last week’s Monetary
Policy Committee (MPC) meeting. In a Frequently Asked Questions (FAQ)
document on its website, the apex bank explained that the cut was driven by a
sustained decline in inflation over the past five months and expectations of
further moderation through year-end.
“The MPC lowered the MPR by 50 basis points to 27% in
response to the sustained decline in inflation and in anticipation of further
decline in inflation for the remainder of 2025,” the CBN said.
“The reduction will help support economic recovery efforts without undermining
macroeconomic stability.”
Liquidity Management: From Asymmetric to
Symmetric Corridor
Alongside the rate cut, the CBN announced a revision
of the Standing Facilities corridor, narrowing it from +500/-100
basis points to a symmetric +250/-250 basis points around the MPR.
The adjustment shifts the system from an asymmetric to
a symmetric corridor, aimed at improving liquidity management and reducing
volatility in overnight interest rates.
Standing facilities—comprising the Standing Lending
Facility (SLF) and Standing Deposit Facility (SDF)—allow banks to
borrow or deposit excess liquidity overnight at specified rates.
“This implies that the CBN is now operating a
symmetric corridor, designed to deepen interbank market efficiency and
strengthen monetary policy transmission,” the bank noted.
Why It Matters
The CBN said the measures were carefully balanced to
sustain ongoing disinflation efforts while ensuring adequate liquidity for the
banking sector to support credit expansion and economic growth.
What You Should Know
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