Central Bank of Nigeria cuts key rate to 23% — Premium Times Nigeria

The Central Bank of Nigeria cut its key rate from 26.5% to 23% following the 307th meeting of the Monetary Policy Committee, held on September 21–22 in Abuja. The decision was reported by Premium Times Nigeria, citing Central Bank Governor Olayemi Cardoso.

Policy parameter review

The decision followed two meetings at which the rate was kept at 26.5% — in May and July. In February, the regulator cut it by 50 basis points, from 27%.

According to Cardoso, the committee also decided to revise the parameters of the interest rate corridor around the key rate. The Central Bank explained that this is an operational adjustment aimed at strengthening the monetary policy transmission mechanism and supporting the transition to an inflation-targeting regime, rather than a change in the current monetary policy stance.

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New corridor and reserve requirements

The committee set an asymmetric rate corridor of +50/-300 basis points relative to the key rate. The Central Bank said this step should reduce the incentive for banks to keep excess funds with the regulator and encourage lending to the economy.

At the same time, reserve requirement ratios were left unchanged: 45% for commercial banks, 16% for merchant banks, and 75% for public-sector deposits outside the single treasury account system.

The decision was made amid easing inflationary pressure. According to Nigeria's National Bureau of Statistics, annual inflation stood at 15.39% in August, compared with 15.43% in July, 15.91% in June, and 15.93% in May. The publication also notes that fuel prices have recently risen again in the country, which could increase pressure on the cost of goods and services.