Dear Subscriber,

CBN Cuts Rates by 50bps

In line with expectations, the Central Bank of Nigeria voted to cut the Monetary Policy Rate (MPR) by 50 basis points to 27% p.a. in its MPC meeting on September 23. This marks the first rate cut since 2020, reflecting the committee’s response to easing inflation, rising GDP growth, slowing money supply, and other positive economic indicators. The committee also adjusted the standing facilities corridor to +260/-250 basis points, reduced the Cash Reserve Ratio (CRR) for commercial banks to 45% while retaining it for merchant banks at 16%.

While headline inflation has eased for the fifth consecutive month to 20.12% in August from xx a year ago, the reduction in the policy rate aims to address the persistently high interest rates that have constrained economic activity.

In the FX market, the naira has appreciated by about 6.06% over the last 3 months to trade at  ₦1,516/$ in the parallel market, supported by stable oil prices hovering near $67 per barrel and gross external reserves increasing 2.83% y/y to $42 billion in September.

Economic Growth: Gaining Momentum

Nigeria’s GDP rose to a 4-year high of 4.23% in Q2’25, up from 3.13% in Q1’25, mainly reflecting the effect of the rebasing (2019 base year). The industrial sector led the expansion with a 7.45% growth, supported by increased crude oil production averaging 1.48 million barrels per day in Q2’25.

Outlook: Positive Momentum into Year-End

The remainder of 2025 appears poised for a stronger performance, with foreign currency inflows and stable commodity prices providing support. December is shaping up as an upbeat period, boosted by diaspora remittances, “Detty December”, and increased spending on concerts, films, and festivals. The naira should remain stable around ₦1,500–₦1,550/$, and headline inflation could ease to 20%. The MPC is also likely to cut rates in November, sustaining optimism into the festive season.

These insights were unpacked by Bismarck Rewane on Channels TV’s News at Ten.

Please find the slides and video link attached.

Enjoy your read.