The Central Bank of Nigeria (CBN) has introduced a 75 per cent cash reserve ratio (CRR) on non-Treasury Single Account (TSA) public sector deposits to improve liquidity management.
The Governor of CBN, Olayemi Cardoso, revealed this during his briefing on the outcome of the Monetary Policy Committee (MPC) meeting on Tuesday, September 23.
He further announced a benchmark interest rate of 50 basis points to 27 per cent, an adjustment of the standing facilities corridor around the MPR to +250/-250 basis points, and CRR for commercial banks to 45 per cent, while retaining the merchant banks’ at 16 per cent.
The committee also kept the liquidity ratio unchanged at 30 per cent.
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According to Cardoso, the committee’s decision to lower the monetary policy rate was predicated on the sustained disinflation recorded in the past five months, projections of declining inflation for the rest of 2025, and the need for a new policy to be implemented in the next five years to support economic recovery efforts.
He said the MPC also adjusted the standing facilities corridor to improve the efficiency of the interbank market and strengthen monetary policy transmission.
“These include the sustained disinflation, improved output growth, stable exchange rates, and robust external reserves.
“It particularly noted the increased momentum of disinflation in August 2025, being the highest in the past five months,” Cardoso said.
He said the deceleration, underpinned by monetary policy tightening, exchange rate stability, and increased capital inflows, as a surplus current account balance, had helped to broadly anchor inflation expectations.
Other factors that contributed to the deceleration include the continued moderation in the price of PMS and the notable increase in crude oil production, he said.
“In the view of the Committee, the stability in the macroeconomic environment offered some headroom for monetary policy to support economic growth and recovery,” Cardoso said.
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He noted, notwithstanding the consistent deceleration in inflation, the Committee observed the persistent build-up of excess liquidity in the banking system, resulting largely from fiscal releases emerging from improved revenues.
Being mindful of the need to preserve the prevailing macroeconomic stability, the MPC noted the risks posed by the excess liquidity in the banking system, Cardoso said.
He said the committee noted that the effective formulation of the interbank market remains critical to enhancing the transmission of monetary policy.
“This, therefore, informed the decision to adjust the width of the standing facilities corridor to boost interbank market transactions and enhance the stability of the market,” the CBN governor said.
According to him, the committee acknowledged the continued stability of the foreign exchange market and its critical importance in achieving rapid disinflation and therefore called on the bank to continue the implementation of policies that would further boost capital inflows and deepen foreign exchange liquidity.
14 banks met recapitalisation
Cardoso reiterated the resilience of the banking system, with most of the financial soundness indicators remaining within their respective prudential benchmarks.
It also acknowledged the significant progress in the ongoing bank recapitalisation exercise, revealing that 14 banks have fully met the new capital requirement.
“They, therefore, urged the bank to continue the implementation of policies and initiatives that would ensure the successful completion of the ongoing recapitalisation exercise,” Cardoso said.
He said the MPC further noted the successful termination of forbearance measures and waivers on single obligors, which have helped to promote transparency, risk management, and long-term financial stability in the banking system.
The committee reassured the public that the impact of the removal of forbearance is transitory and does not pose any threat to the soundness and stability of the banking system, Cardoso added.
Alex is a business journalist cum data enthusiast with the Pinnacle Daily. He can be reached via ealex@thepinnacleng.com, @ehime_alex on X
