CBN cuts benchmark interest rate to 23%

The Central Bank of Nigeria has cut its benchmark interest rate from 26.5% to 23%, its first major easing move after months of tight monetary policy.

CBN Governor Olayemi Cardoso announced the decision on Tuesday after the 307th meeting of the Monetary Policy Committee in Abuja. The committee also adjusted the standing facility corridor to +50 and -300 basis points around the policy rate.

The bank retained the cash reserve requirement at 45% for deposit money banks, 16% for merchant banks and 75% for non-TSA public sector deposits. The liquidity ratio was also retained at 30%.

Cardoso said the committee reviewed recent domestic and global economic conditions before taking the decision. The cut came after Nigeria’s inflation rate eased slightly for a second straight month, falling to 15.39% in August from 15.43% in July.

The move gives businesses and borrowers a signal that the apex bank is beginning to loosen policy, although lending costs are still high and banks will continue to operate under strict reserve requirements.

Sources: Channels Television, Premium Times, Daily Post, Vanguard