November 26, 2025/InvestmentOne Report

The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) held their 5th meeting of the year where they voted to: 

–   Retain the Monetary Policy Rate (MPR) at 27.00%.

–   Adjust the Standing Facilities corridor around the MPR from +250/-250bps to +50/-450bps.

–   Retain the Cash Reserve Ratio (CRR) for Commercial Banks at 45.00% and for Merchant Banks at 16.00%.

–   Maintain the 75.00% CRR on Non-TSA public sector deposits.

–   Keep the Liquidity Ratio unchanged at 30.00%.

At the just concluded 303rd MPC meeting, the Committee held the MPR at 27.00%, following the 50bps cut in September, the first reduction in over five years. This reflects an effort to balance strong disinflationary momentum with the reality that inflation remains above the Bank’s comfort band. Headline inflation has slowed for seven consecutive months, easing from 20.12% in August to 16.05% in October, supported by tighter monetary conditions, improved food supply, relative FX stability, and firmer external buffers.

The Committee further reiterated that the September measures of shifting the standing facilities to a +250/-250bps corridor, reducing the CRR for commercial banks to 45%, and introducing a CRR of 75% on non-TSA public deposits, have significantly altered liquidity conditions. Current high system liquidity and record placements in SDF underline excess balances that the corridor and CRR adjustments were designed to curb. Accordingly, the MPC retained the MPR, CRR, Liquidity Ratio, and the newly widened +50/-450bps Standing Facilities corridor to better observe how earlier actions transmit to credit, inflation, and FX stability in the coming months.

We evaluate the November outcome as a pause, rather than an end, to the easing cycle that started in September. The Committee anticipates disinflation to be sustained in the months ahead, supported by FX stability, stronger reserves, a firmer current account and the lagged effects of past tightening, although food price pressures, festive-season demand and renewed insecurity in key food-producing regions remain risks. The wider +50/-450bps corridor deters idle balances at the CBN and diverts liquidity to the fixed-income market, where banks naturally show higher demand for risk-free instruments. Although banks may initially bid higher to compensate for the lower SDF floor, clearing rates are ultimately determined by the CBN and DMO, and stronger demand should eventually compress yields as liquidity settles. The corridor shift also has a subtle hawkish tint, suggesting the Committee could hold financial conditions tight at the next MPC meeting until disinflation is more solidly anchored.

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