Date: Tuesday, 23rd September 2025 Ref: CBN/MPC/COM/159/302 Attention: News Editors/Gentlemen of the Press

MONETARY POLICY RATE REDUCED TO 27.00 PER CENT

CENTRAL BANK OF NIGERIA

The 302nd Monetary Policy Committee (MPC) meeting of the Central Bank of Nigeria (CBN) was held on September 22 and 23, 2025. The Committee reviewed key developments in the global and domestic economies including the outlook. All twelve (12) members of the Committee were in attendance.

Decisions of the MPC

The Committee decided as follows:

1. Reduce the Monetary Policy Rate (MPR) by 50 basis points to 27.00 per cent.
2. Adjust the Standing Facilities corridor around the MPR to +250/-250 basis points.
3. Adjust the CRR for commercial banks to 45 per cent while retaining that of merchant banks at 16 per cent. Introduce a 75 per cent CRR on non-TSA public sector deposits.
4. Keep the Liquidity Ratio unchanged at 30.00 per cent.

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 to support economic recovery efforts. The MPC also adjusted the Standing Facilities corridor to improve the efficiency of the interbank market and strengthen monetary policy transmission. The Committee further introduced a 75 per cent CRR on non-TSA public sector deposits for enhanced liquidity management.

Considerations

The MPC expressed satisfaction with the prevailing macroeconomic stability, evidenced by the improvements in several indicators. These include the sustained disinflation, improved output growth, stable exchange rate and robust external reserves. It particularly noted the increased momentum of disinflation in August 2025, being the highest in the past five months. This deceleration, underpinned by monetary policy tightening, exchange rate stability, increased capital inflows, and surplus current account balance, have helped to broadly anchor inflation expectations. Other factors that contributed to the deceleration include the continued moderation in the price of Premium Motor Spirit (PMS) and the notable increase in crude oil production. In the view of the Committee, the stability in the macroeconomic environment offered some headroom for monetary policy to support economic recovery.

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 risk posed by excess liquidity in the banking system.

Members noted that effective functioning of the interbank market remains critical to enhanced 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 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.

On the financial sector, the MPC noted the continued resilience of the banking system, with most of the financial soundness indicators remaining within their respective prudential benchmarks. Members also acknowledged the significant progress in the ongoing bank recapitalization exercise, as fourteen (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.

The Committee further noted the successful termination of forbearance measures and waivers on single obligors, which has helped to promote transparency, risk management and long-term financial stability in the banking system. The MPC 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.

Price and Other Domestic Developments

Headline inflation (year-on-year) moderated further to 20.12 per cent in August 2025, from 21.88 per cent in July, driven by the decline in both food and core inflation. On a month-on-month basis, headline Inflation also decreased to 0.74 per cent in August 2025 from 1.99 per cent in the preceding month. Similarly, core inflation (year-on-year) eased to 20.33 per cent in August 2025, from 21.33 per cent in July, due to the slowdown in the cost of services, housing and utilities, as well as transport and logistics. Food inflation (year-on-year) also moderated to 21.87 per cent in August 2025, from 22.74 per cent in July, attributed to the decline in the prices of staples, especially rice, guinea corn, maize and millet.

On output, the recently released GDP for the second quarter of 2025 showed the sustained resilience of the Nigerian economy with a real growth rate of 4.23 per cent (year-on-year) compared to 3.13 percent in the first quarter of 2025. The Committee particularly noted the significant improvement in the performance of the oil sector which grew by 20.46 per cent compared to 1.87 per cent in the preceding quarter, a positive development that is expected to further bolster foreign exchange reserves and sustain stability in the foreign exchange market. In this regard, the Committee commended the efforts of the Federal Government and called for continued vigilance to strengthen the momentum of security across the country in order to increase oil output and food production.

Gross external reserves remained robust at US$43.05 billion on September 11, 2025, compared with US$40.51 billion at end-July 2025 with an import cover of 8.28 months. Similarly, the Q2 2025 current account balance recorded a significant surplus of US$5.28 billion compared with US$2.85 billion in Q1 2025.

Global Developments

Available projections indicate that global output recovery is expected to improve on the back of favourable trade negotiations and monetary policy easing, particularly in the advanced economies. However, persistent geopolitical tensions and lingering trade uncertainties could disrupt global supply chains and dampen the outlook.

Global inflation is projected to sustain its deceleration, albeit, at a slower pace, due to the impact of trade tariffs and other structural challenges. This trajectory has necessitated a cautious and data-dependent approach to monetary policy easing by central banks, especially in emerging markets and developing economies.

Outlook

Staff projections suggest a sustained disinflation over the coming months, driven by the lagged effects of previous rate hikes, continued stability in the foreign exchange market, and decline in the price of PMS. Furthermore, the onset of the harvest season is expected to increase local food supply, moderate food prices and contribute to the overall decline in inflation.

In its commitment to achieving the core mandate of price stability, the Committee will remain proactive through a data-driven policy response.

The next meeting of the Committee is scheduled for Monday, 24th and Tuesday, 25th November 2025.

Thank you. Olayemi Cardoso Governor, Central Bank of Nigeria September 23, 2025.

PERSONAL STATEMENTS BY THE MONETARY POLICY COMMITTEE MEMBERS

MPC MEETING SEPTEMBER 22 – 23, 2025

1. AKU PAULINE ODINKEMELU

INTRODUCTION

I vote to reduce the Monetary Policy Rate (MPR) by 50 basis points from 27.50 per cent to 27.00 per cent, adjust the asymmetric corridor around the MPR to +250/-250 basis points, adjust the Cash Reserve Ratio for commercial banks to 45 per cent while retaining that of merchant banks at 16 per cent, introduce a 75 per cent CRR on non-TSA public sector deposits, and retain Liquidity Ratio at 30.00 per cent. My decision is influenced by the following developments:

ECONOMIC AND FINANCIAL CONTEXT

Global Economic Developments

WEO July 2025 update projects global growth at 3.0 per cent and 3.1 per cent in 2025 and 2026, respectively. The modest improvement in global growth remained subdued and below the pre-pandemic level due to geopolitical tensions, particularly, in the Middle East and the ongoing Russia-Ukraine conflict, tight global financial conditions, and escalating trade restrictions. The divergence in growth across the regions also constitutes a risk to the outlook. Growth in the Advanced economies is projected to moderate to 1.5 per cent in 2025. Growth in the Emerging Markets and Developing Economies (EMDEs) is expected to moderate from 4.3 per cent in 2024 to 4.1 per cent in 2025 and 4.0 per cent in 2026. Sub-Saharan Africa's growth has been revised upward to 4.0 per cent in 2025, with a tentative rebound to 4.3 per cent in 2026. The highly divergent growth forecast underscores the importance of a multi-level action at the global stage in addressing the threats to the outlook, which are largely the geopolitical tension and trade restrictions.

Global inflation is expected to continue its downward trend, converging towards advanced-economy central banks' targets, supported by tight financial condition, decrease in commodity prices, stabilisation of global supply chain, and labour market normalization. The IMF forecasts global inflation to decline from 5.7 per cent in 2024 to 4.2 per cent in 2025 and 3.6 per cent in 2026 (still higher than advanced-economy central bank targets). In the advanced economies, inflation is projected to ease from 2.6 per cent in 2024 to 2.5 per cent in 2025 and 2.1 per cent in 2026. Meanwhile, EMDE inflation is expected to decline from 7.7 per cent in 2024 to 5.4 per cent in 2025 and 4.5 per cent in 2026, though risks remain elevated due to exchange rate pressures, infrastructure gaps, supply chain disruptions, energy shortages, geopolitical tensions, and climate-related shocks.

Domestic Economic Developments and Outlook

The Nigerian economy grew from 3.13 per cent (year-on-year) in the first quarter of 2025 to 4.23 per cent in in the second quarter of 2025. This represents sustained resilience in the domestic economy, driven by robust performance in the services sector (particularly financial & insurance, transport and storage, and information and communication), improvement in oil sector, and contributions from industrial and agricultural sectors. While growth remains positive and resilient, it is still fragile due to insecurity, subdued consumer demand, and elevated interest rates environment.

Headline inflation (year-on-year) eased further to 20.12 per cent in August 2025 from 21.28 per cent in July 2025, primarily due to decline in food and core inflation. The decline in headline inflation was driven largely by a slowdown in food price, as monthly farm/food price inflation decelerated in August, consistent with improved domestic supply during the harvest window, and lower month-on-month food pressures. Decline in the cost of housing and utilities, and education services in August also contributed to declining inflation.

The achieved Exchange rate stability combined with increased capital inflows and continuing expansion in current account surplus to US$5.28 billion in Q2,2025 as well as the External Reserves that have been steadily increasing month on month and recently hit US$43.05 billion (providing 8.2 months of import cover and substantial buffer against external shocks) all signal growing market confidence.

RATIONALE FOR DECISION & POLICY IMPLICATIONS

Given the developments in the global economy, projected improvement in growth and inflation descent, I vote for a reduction of monetary policy rate in line with the global trend, while urging the Bank to closely monitor the potential spillover effects of trade tensions and disinflation on the domestic economy, particularly, trade costs and inflationary pressures. I also vote for reduction in CRR to 45.00 per cent to create headroom for deposit money bank's lending to the real sector. The declining domestic inflation and stable exchange rate have afforded the Bank a rare privilege to effectively anchor inflation expectation and promote price stability during a period of heightened global uncertainty.

Accommodative monetary stance could support the improvement in macroeconomic indicators, sustained resilience of the domestic economy, downward trajectory in inflation, improvement in external reserves, and stability in the foreign exchange market. The Bank is, therefore, encouraged to proactively monitor the significant upside risks to the growth, which include potential geopolitical disruptions to crude oil markets, prospective increases in diesel prices and electricity tariffs, threat of renewed insecurity in agricultural communities, adverse weather conditions such as flooding, and inflationary spillovers from global trade tensions. I also advocate for enhanced coordination between monetary and fiscal authorities in managing the risk to economic outlook.

While the banking sector remains sound and stable, temporary decline in Capital Adequacy Ratio (CAR) could impact the operational freedom of the banks and the cost of funds in the market, especially, during this period of recapitalisation. Reducing the monetary policy rate would give banks headroom for operational flexibility while striving to comply with the recapitalisation timeline. Given the improvement in macroeconomic indicators, reducing the policy rate and cash reserve ratio would ultimately reduce the higher risks associated with high-interest rate regimes, and potential adverse effects of sustained tight monetary cycle on the asset quality of banks.

Regarding the corridor, I vote for adjustment to symmetric corridor of +250/-250. From practical viewpoint, symmetric promotes a more straightforward and credible signal of the intended policy stance, and a vibrant interbank market which is crucial for efficient liquidity distribution and bank-to-bank trust. It is also a proven robust and balanced defence against interest rate volatility from both liquidity shortages and surpluses, and efficient allocation of reserves within the banking system. Symmetry allows the central bank to change its policy stance without necessarily altering its liquidity framework and offers a valuable barometer of the financial system's health, which is crucial for timely intervention.

Conclusion

In summary, the confluence of moderating inflation, resilient but fragile growth, and financial system considerations warrants a calibrated easing of the policy stance. My vote for a reduced MPR and CRR is designed to consolidate recent macroeconomic gains while providing headroom for credit expansion to the real sector. I strongly urge enhanced coordination between monetary and fiscal authorities to address underlying structural vulnerabilities and proactively manage the significant upside risks to the outlook.

2. ALOYSIUS UCHE ORDU

Introduction

I voted as follows:

1. Reduce the Monetary Policy Rate (MPR) by 50 basis points to 27.00 percent.
2. Adjust the Standing Facilities corridor around the MPR to +250/-250 basis points.
3. Adjust the CRR for commercial banks to 45 percent while retaining that of merchant banks at 16 percent.
4. Introduce a 75 percent CRR on non-TSA public sector deposits.
5. Keep the Liquidity Ratio unchanged at 30.00 percent.

Economic and Financial Developments

Global Developments

The September MPC meeting took place in the context of continuing volatility in the trade and economic policy landscape in the U.S. The Administration's attacks on the independence of the US Federal Reserve, tighter immigration policy, the imposition of much higher tariffs on trading partners, and changes in spending, tax, and regulatory policies continue to have implications for growth and productivity.

In his August 22 Jackson Hole speech, U.S. Fed Chair Jay Powell walked a fine line, balancing the Fed's dual mandate (stable prices and full employment). The data shows that jobs growth has stalled, and the unemployment rate has increased while tariffs continue to push prices higher, making the path forward anything but risk-free, as indicated by Chair Powell.

Inflation remains above the Fed's 2 percent target according to its preferred inflation gauge, the Core Personal Consumer Expenditure (PCE), which rose to 2.9 percent in August, the highest level since February. Nevertheless, the Fed views tariff-driven price hikes as “transitory” rather than structural, based on which it decided to focus on the employment side of its mandate.

Accordingly, on September 17, the Fed cut its benchmark interest rate, for the first time in the past 12 months, by 0.25 percentage point to a target range of 4.00 percent to 4.25 percent. It also signaled expectations of further rate cuts later this year.

My own view is that the U.S. economy's greatest risk at this moment in time is inflation rather than unemployment, as the effects of the tariff increases have not yet been fully felt. Already, service sector inflation, which should not be affected by tariffs, is increasing, an indication that price increases could be more persistent in the period ahead. Close monitoring of developments in the U.S. economy is warranted in view of their implications for the global economy and emerging markets, including Nigeria.

Meanwhile, global economic growth is proving to be more resilient than expected. In its Economic Outlook Interim Report September 2025, the OECD' projects global growth of 3.2 percent in 2025 versus 2.9 percent projected in its June report. The report forecast 0.2 percent increase in U.S. growth to 1.8 percent in 2025. The euro area growth is upgraded to 1.2 percent for the same period. Growth in emerging markets such as Brazil (2.3 percent), India (6.7 percent), South Africa (1.1 percent) are also upgraded as well as China with a slight increase to 4.9 percent.

Developments in the domestic economy

CBN Staff presentations show that Nigeria's economic landscape in 2025 reflects resilience and adaptation amid a challenging global environment marked by geopolitical fragmentation, elevated debt levels, and the slow recalibration of monetary policy across major economies. Real sector performance has remained encouraging, with Nigeria's GDP growth forecast at 4.25 percent for the year—a notable improvement on the back of expanding services and steady agriculture output, underpinned by targeted policy reforms in security and infrastructure that have boosted business confidence and sectoral optimism. The sustained positive trajectory of the Purchasing Managers Index, which held at 51.7 points in August, signals persistent expansion in private sector activity and provides further credence to the recovery narrative.

Inflation developments offer a cautiously optimistic outlook, as headline inflation moderated to 20.12 percent in August from 21.88 percent in July, recording its fifth consecutive monthly decline. This deceleration is largely attributable to the slowdown in both food and core inflation, supported by increased food production and improved security in farming regions. Core inflation fell to 20.33 percent, and food inflation eased to 21.87 percent, indicating that Nigeria's fiscal and monetary authorities are achieving greater efficacy with contractionary stances and sectoral interventions. The disinflationary momentum is expected to continue in the coming months, buoyed by the stability of the naira, declining energy prices, and the start of harvest seasons. However, inflation remains in double digits, indicating persistent structural pressure points, particularly in food and energy markets and regional disparities in price levels.

On the monetary and financial fronts, Nigeria has seen meaningful progress. CBN's liquidity management enabled policy rates to remain within targeted corridors, reflecting improved monetary transmission. The Nigerian Exchange All-Share Index reached fresh highs, buoyed by recapitalization in the insurance sector and renewed investor confidence.

Sectoral growth has remained broad-based, with services, finance, insurance, ICT, and agriculture leading output growth and accounting for 57.5 percent of real GDP expansion in Q1 2025. Oil sector output also improved modestly, supported by consistent production and adherence to OPEC quotas. Nonetheless, headwinds persist as high public debt, rising fiscal deficit, and elevated debt-servicing burdens create ongoing fiscal challenges, requiring continued discipline in fiscal management and enhanced coordination between monetary and fiscal authorities. The public debt stock rose to #149.39 trillion, but the debt-to-GDP ratio remains under key international thresholds and reflects prudent risk management. Fiscal reforms and increased non-oil revenue are yielding dividends though more needs to be done to improve the quality of expenditures at the Federal, State and Local governments.

External sector dynamics remain generally constructive. Nigeria's balance-of-payments deficit narrowed markedly in Q2 2025, thanks to growing surpluses in the goods and secondary income accounts and improved reserve assets. The current account surplus reached $5.28 billion—or 8.69 percent of GDP—in Q2, marking an 85 percent increase from Q1 and highlighting the country's improved position for absorbing external shocks. External reserves have risen significantly, standing at $42.03 billion in mid-September, providing robust coverage for more than nine months of imports—an indicator of improved external resilience. The naira appreciated month-over-month at both the official and parallel FX windows, signaling the positive effect of continued market reforms and strengthened investor sentiment. The resilience seen in remittance inflow, capital market performance, and gradual improvement in the international investment position further underpin Nigeria's external stability.

Global perspectives provide an essential context for Nigeria's domestic developments. As indicated earlier, although global growth has been revised upwards by the OECD for both advanced economies and emerging markets, it remains below pre-pandemic averages. Output in advanced economies is forecast at 1.5 to 1.6 percent, and in emerging markets, at 4 percent in 2025. Moderation in global inflation, a weakening dollar, improvements in global commodity prices, and elevated uncertainty amid persistent trade and geopolitical tensions all shape Nigeria's external outlook. Oil prices remain subject to downside risks from weaker Chinese demand and increased non-OPEC supply, but the rise in gold and broader commodity prices is providing new inflows to external reserves.

Looking ahead, CBN's outlook signals that inflation is expected to moderate further, barring significant upside risks from external shocks or divergence in global policy rates. Output growth for Q2 and full-year 2025 are projected at 3.87 and 4.25 percent, respectively, contingent upon reforms in fiscal management, infrastructure investment, and FX market stabilization. While business and household expectations for inflation remain mixed, with concerns persisting over energy costs and insecurity, the business expectation index continues to improve, reflecting increasing optimism across sectors. The composite PMI in agriculture and services also signals ongoing expansion, and capacity utilization in agriculture reached new heights in the current review period.

Risks remain. Persistent global trade uncertainties, ongoing tariff negotiations, rising debt ratios, and lingering inflation pressures all point to the necessity for CBN to maintain vigilance and adjust its policy toolkit responsively. Fiscal pressures arising from high recurrent expenditure and elevated debt-service costs may crowd out private investment and slow the pace of capital spending, underscoring the importance of prudent fiscal management. Despite these challenges, Nigeria is poised to benefit from global monetary easing, improved capital flows to emerging markets, and the gradual normalization of commodity prices.

Rationale for my vote.

I am cautiously optimistic about Nigeria's macroeconomic developments for 2025. The convergence of fiscal reform, improved monetary transmission, and sectoral dynamism positions the country to withstand external shocks and foster inclusive and sustainable growth. Nonetheless, persistent risks and ongoing structural challenges demand continued vigilance, proactive policy coordination, and a commitment to sound economic management: hallmarks of central banking in times of global uncertainty.

Nigeria's macroeconomic outlook in 2025 reflects resilience in the face of persistent global risks and domestic structural constraints. As indicated earlier, global growth has improved modestly but remains divergent. The trade outlook for 2025 has been revised upward, supported by easing global inflation. Geopolitical fragmentation, ongoing trade disputes led by US tariffs, and elevated global debt continue to shape downside risks for both advanced and developing economies, affecting Nigeria's external balances and market sentiment.

Domestically, CBN Staff presentations show several positive developments since the July 2025 MPC meeting. Headline inflation moderated for the fifth consecutive month, reaching 20.12 percent in August, driven by improved food production and security, alongside slower increases in core inflation. CBN's contractionary stance and targeted sectoral reforms have helped to anchor inflation expectations and support currency stability. Real output growth for the full-year 2025 is projected at 4.25 percent, well above per capita income growth. The Purchasing Managers Index held steady at 51.7 points in August, signaling ongoing expansion in private sector activity and improved business optimism, even amid operational challenges such as insecurity and elevated interest rates.

Sectoral growth has been broad-based, with services, finance, insurance, ICT, and agriculture leading contributions to real GDP. The oil sector remained stable, sustaining production above OPEC quotas and benefiting from global commodity price trends. External reserves strengthened to $42.96 billion in mid-September. The business expectation index has climbed sharply, reflecting optimism for the remainder of 2025, even as fiscal deficit and debt service obligations remain as pressure points demanding ongoing discipline.

Policy responses have remained measured. CBN maintained its monetary policy rate at 27.50 percent and held liquidity management tools firmly within standing facilities corridors, ensuring effective transmission and reduced market volatility. Fiscal authorities have prioritized sectoral reforms and public investment, with a focus on improving real sector capacity and infrastructure, particularly in the agricultural and power sectors. And the moderation in inflation, stability of the naira, and resilience seen in the service-driven economic expansion collectively signal that Nigeria is positioned to weather global uncertainty in the near term.

Under the circumstances, I believe that measures to provide some relief to the real sector of the economy and consumers are warranted at this time, hence my vote as indicated at the outset.

3. BALA MOH'D BELLO MON

Introduction

At the September 2025 Monetary Policy Committee (MPC) meeting, following a careful and rigorous review of global and domestic macroeconomic developments and their implications for the stability of the Nigerian economy, I voted as follows:

1. Reduce the Monetary Policy Rate (MPR) by 50 basis points to 27.00 per cent.
2. Adjust the Standing Facilities corridor around the MPR to +250/-250 basis points.
3. Increase the Cash Reserve Ratio (CRR) for commercial banks to 45 per cent, while retaining that of merchant banks at 16 per cent. Introduce a 100 per cent CRR on non-TSA public sector deposits.
4. Retain the Liquidity Ratio at 30.00 per cent.

Rationale

My decision reflects confidence in the current trend of macroeconomic indicators and the need to continue supporting economic activity. Available evidence suggests that key indicators are moving in the desired direction, with a positive short- to medium-term outlook.

Headline inflation (year-on-year) moderated for the fifth consecutive month, declining to 20.12 per cent in August 2025 from 21.88 per cent in July. This improvement was driven by exchange rate stability, increased food production, and a slowdown in core inflation. On a month-on-month basis, headline inflation decreased to 0.74 per cent in August, compared with 1.99 per cent in July. Core inflation (year-on-year) also eased to 20.33 per cent from 21.33 per cent, reflecting lower costs in services, housing, utilities, transport, and logistics. Similarly, food inflation moderated to 21.87 per cent from 22.74 per cent, aided by reduced prices of staples such as rice, maize, millet, and guinea corn.

Real GDP growth has maintained an upward trajectory. According to the National Bureau of Statistics, the economy expanded by 4.23 per cent (year-on-year) in Q2 2025, compared with 3.13 per cent in the previous quarter. Growth was driven by strong non-oil sector performance alongside a notable 20.46 per cent expansion in the oil sector. These outcomes highlight the positive impact of ongoing federal government reforms in stimulating economic activity and improving investor confidence. A rate cut, in my view, will further enhance output performance by lowering the cost of credit.

The banking sector has remained resilient, with sound financial indicators despite tight monetary conditions. The ongoing recapitalization exercise is expected to further strengthen the sector and enhance its capacity to support credit growth, particularly in a lower interest rate environment.

At the same time, I note the build-up of liquidity in the banking system, which requires careful management to mitigate associated risks. This consideration informed my support for a 100 per cent CRR on non-TSA public sector deposits, which will help moderate liquidity injections and contain inflationary pressures.

The external sector continues to show strong performance. Gross external reserves rose significantly to US$43.05 billion as of September 11, 2025 - the highest in six years - up from US$5.28 billion at end-July 2025, providing an import cover of 8.28 months. The balance of payments also maintained a surplus through the second quarter of 2025.

I commend the fiscal authorities for ongoing reforms in critical sectors, which have complemented monetary policy actions and yielded desirable outcomes.

Conclusion

Overall, the Nigerian economy remains stable, with key indicators moving in the right direction. Safeguarding this stability must remain a priority. Supporting output performance and investments is essential but must be balanced with the imperative of maintaining price and monetary stability - the core mandate of the Committee.

Although the medium-term inflation outlook suggests a downward trajectory, its current level remains above the target band, warranting continued vigilance. It is also important to sustain relative exchange rate stability by maintaining an interest rate regime that supports capital inflows in the short term, while more long-term structural measures are pursued.

These considerations guided my decision at the September 2025 MPC meeting.

4. BANDELE A.G. AMOO

Introduction

In view of the recent observed developments in the domestic and external economies, I hereby vote as follows: a) Reduce the Monetary Policy Rate (MPR) by 50 basis points to 27.0 per cent. b) Adjust the asymmetric corridor around the MPR to +250/-250 basis points. c) Reduce the Cash Reserve Ratio (CRR) to 45.0 per cent for Deposit Money Banks (DMBs) and retain the CRR for Merchant Banks at 16.0 per cent. d) Introduce a 75 per cent CRR on non-TSA public sector deposits. e) Retain the Liquidity Ratio (LR) at 30.0 per cent. My decision was influenced by the following considerations:

1. Global Economic Developments

In the last two months, global economic growth has improved modestly but remains generally weak and highly divergent across regions. Progress has been observed in tariff negotiations, and there have been gradual easing of headline inflation and more favourable financial market conditions. Elevated fiscal spending in several advanced and emerging economies has also continued to support aggregate demand. In the United States, growth prospects moderated slightly as trade and fiscal policy adjustments, coupled with renewed diplomatic efforts among major economies, tempered earlier tensions. Nevertheless, the resilience previously exhibited by key advanced economies has persisted, underpinned by strong labour markets and accommodative financial conditions. Despite the moderation in global uncertainty, monetary policy responses among central banks have remained mixed, reflecting differences in inflation dynamics, policy priorities, and domestic growth conditions.

2. Domestic Macroeconomic Developments and Outlook

The domestic economy experienced broad-based growth in Q22025, expanding by 4.23 per cent, compared with 3.13 and 3.48 per cent in Q120225 and Q22024, respectively. The headline inflation for August 2025 stood at 20.12 per cent, a deceleration by 1.76 percentage points from the 21.88 per cent in July 2025. On a month-on-month basis, the inflation rate stood at 0.74 per cent in August, reflecting a decrease from 1.99 per cent in July. Similarly, core inflation (year-on-year) eased to 20.33 per cent, from 21.33 per cent in July, due to the slowdown in the cost of services, housing and utilities, as well as transport and logistics. Food inflation (year-on-year) also moderated to 21.87 per cent in August 2025, from 22.74 per cent in July, attributed to the decline in the prices of some staples.

The banking sector remained strong, stable, and resilient, as reflected by key prudential indicators.

A good number of banks have also met the requirements for the ongoing recapitalization exercise, signaling readiness to strengthen capital buffers and support future growth. Payment system stability was also sustained, supported by robust infrastructure and sound regulatory framework. Nonetheless, Non-Performing Loans (NPL) ratio rose slightly but remained within tolerable limit. Aggregate credit extended by financial institutions moderated to #64.38 trillion, from #64.85 trillion in July 2025, while the credit-to-GDP ratio declined to 24.6 per cent from 24.78 per cent in the preceding month.

Sectoral credit distribution remained largely concentrated in oil and gas, manufacturing, finance & insurance, and general commerce, which jointly accounted for 69.67 per cent of total credit, an imbalance that could constrain efforts toward achieving Nigeria's US$1 trillion economy aspiration. Meanwhile, banking system liquidity remained elevated despite maintaining the CRR at 50 per cent. The removal of fuel subsidies, coupled with enhanced fiscal revenues and higher FAAC inflows, has increased liquidity injections into the system. This development presents a clear policy signal for a calibrated response aimed at sterilizing excess liquidity to mitigate potential pressures on the foreign exchange market and inflation.

To this end, I therefore agree with the Committee's decision to introduce a targeted CRR measure designed to absorb surplus public-sector liquidity. This approach will reinforce monetary policy effectiveness and send a strong anti-inflationary signal without unduly constraining private-sector credit intermediation. The Nigeria's external sector position maintained its positive trajectory with the overall balance of payments (BOP) deficit improving to US$0.27 billion in Q2 2025 from US$2.77 billion in Q1 2025. The current account surplus increased to US$5.28 billion in Q2 2025, from US$2.85 billion in Q1 2025, reflecting higher trade surplus and growth in remittance inflow. Since the last meeting, the naira has sustained stability owing to improved external perceptions and sentiments. The other positive developments recorded in monetary, fiscal and macroeconomic sectors since the July MPC include: improved monetary policy transmission within the money market; low debt to GDP ratio; Naira appreciation as well as continued moderation in the general prices. Nonetheless, some pressure points persist, including negative real yields on sovereign bonds and increasing concern of spillovers from geopolitical and trade related distortions.

Looking ahead, the preparation for the 2027 general elections has heightened the general pre-election fiscal loosening as we approach 2026. The build-up to the 2027 election will entail increased liquidity injections from the governments at all levels. In terms of macro impact, it will send a strong anti-inflation signal. Monetary policy must, therefore, maintain a conscious vigilance over the growth of money supply to ensure that aggregate demand is monitored closely.

3.0 My Concern

My main concern this period is that the banks are not adequately deploying their excess liquidity to create sufficient credit in the real sector and other critical sectors to engender higher growth in the Nigerian economy. There is, therefore, the need to sterilize those FAAC driven liquidity to prevent them from escalating into foreign exchange market and general prices. This is the underlying reason for my supporting the decision to re-introduce the public sector deposit CRR, as the new policy will only extend the current TSA's sterilization principle to States/LGA's accounts. The reduction in the commercial banks current CRR and the adjustment of the standing facilities corridor would enable banks to profitably manage the new regimes. The downside risks to this policy shall be managed through macro-prudential support by the CBN.

It's gladdening to note that the positive macro-economic developments witnessed in the Nigerian economy in recent time across different sectors continued since the last MPC meeting in July 2025. It's good that several agencies in the economic and social sectors of the Nigerian economy now work more closely to preserve the gains of the past. Nevertheless, the economic stability engendered by the reforms implemented so far must be supported by reinstating Nigeria's import substitution strategies which will take the economy to higher growth path by boosting our industrial productivity across sectors. Despite the challenging external environment, and the ongoing reforms, the Nigerian economy still navigates a steady growth path with price stability. Monetary policy has appropriately used the positive policy space created by the moderate inflation outlook to support growth without compromising on the primary objective of price stability. Nevertheless, I believe that the transmission of our recent policy actions to the broader economy is ongoing. In view of the above discussion, it is my judgement that a 50-basis point reduction in policy rate aligns with maintaining a conducive monetary stance. This is with the aim of anchoring inflation expectations and sustaining the disinflation path. In the immediate future, the Committee will evaluate the scale and pace of monetary easing on a meeting-by-meeting basis, guided by the current data, couple with prevailing balance of risks, in consonance with our forecast trajectory. The MPC should continue to closely monitor economic and financial developments and stands ready to adjust its policy instruments as needed towards the attainment of our desired single digit inflation.

4.0 Conclusion

In conclusion, I like to reiterate the need to strengthen collaboration with all banks, IMTOs, the diaspora community and the development finance institutions in the Bank's continuous efforts to anchor inflation expectations, through improved communication and forward guidance. Finally, we must continue to strengthen existing collaboration with the fiscal authority and support infrastructure investment.

5. EMEM USORO

At the Monetary Policy Committee (MPC) held on September 22 - 23, 2025, I voted to:

i. Reduce the MPR by 50 basis points to 27% ii. Adjust the Asymmetric Corridor from +500/-100 basis points to +250/-250 basis points around the MPR. iii. Reduce the CRR for commercial banks deposits by 500 basis points to 45%, introduce a 75% CRR on non-TSA public deposit, and retain the CRR for merchant banks at 16%; and iv. Retain the LR at 30.0%.

This policy adjustment reflects my recognition of recent progress in macroeconomic stabilization, the need to support real sector credit, and the importance of maintaining financial system resilience amid moderating inflation and improving external conditions.

Over the past quarter, the domestic economy has demonstrated further consolidation. Headline inflation eased further to 20.1% in August 2025, from 21.88% in July, the fourth consecutive month of disinflation. The decline was broad-based, with both food and core inflation moderating, due to lower energy costs, lower input costs due to harvest-related supply improvements and recent reduction in petrol prices, and relative exchange rate stability.

Equally significant to mention has been the remarkable resilience of the exchange rate. The naira maintained relative stability across market segments, supported by improved FX turnover and increased remittance inflows. The modest rise in external reserves which hit $43 billion also helped anchor expectations in the FX market. Furthermore, convergence between the NFEM and BDC segments has further enhanced transparency and investor confidence.

Restrained growth in monetary aggregates also highlights the effectiveness of prior tightening measures. Broad money (M3) expanded by 5.98% year-to-date, well below the 2025 benchmark. Liquidity conditions, though uneven across banks, have remained stable, while short-term interest rates have stayed within the policy corridor. However, the prolonged high-CRR environment and liquidity sterilization have begun to weigh on credit growth and net interest margins, limiting banks' ability to extend new lending to the productive sectors. In the banking system, financial soundness indicators remain broadly stable, and within prudential thresholds, albeit the industry continues to face profit compression due to tight monetary stance i.e elevated CRR debits and sterilisation of liquidity.

The global context also informed this decision. While growth in advanced economies such as the U.S. and Japan remains resilient, Europe and the U.K. continue to experience sluggish expansion amid trade frictions and renewed tariff measures. Inflation has ticked up in the United States and the United Kingdom, but the broader trend suggests gradual disinflation as energy prices stabilise and supply chains normalise. Several central banks have paused or modestly reduced rates to support growth, and global capital flows to emerging markets remain strong. For Nigeria, the combination of a weaker U.S. dollar, firm oil prices, and renewed capital inflows presents a narrow but important window to balance price stability with growth support. The improved external position and exchange rate convergence offer a foundation for cautious monetary accommodation without jeopardizing stability.

Given these dynamics, the Committee judged that a measured easing was both appropriate to reinforce the disinflation trajectory, while easing credit constraints on the productive sectors. The reduction in the MPR by 50 basis points is expected to signal confidence in the economy's direction and encourage a moderate decline in market lending rates, while the narrowing of the asymmetric corridor enhances symmetric response to liquidity conditions.

Similarly, lowering the CRR for commercial banks to 45.0% will release modest liquidity to the system, supporting credit expansion without undermining price stability. In tandem, the new 75% CRR on non-TSA deposits is a targeted macroprudential measure designed to curb potential liquidity arbitrage and discourage excessive reliance on volatile deposits, ensuring that the liquidity released is channelled primarily to productive lending, rather than speculative activities. Moreso, the differentiated CRR treatment signals a maturing liquidity management framework that recognises heterogeneity in bank liabilities while preserving policy discipline.

In the Committee's view, these calibrated adjustments represent a phase of "controlled normalisation”, aimed at maintaining monetary discipline, while providing a modest counter-cyclical impulse to support the ongoing recovery. This is premised upon gradually anchored inflation expectations, sustained positive real interest rates, and the need for moderate policy support to sustain output recovery.

Looking ahead, inflation is projected to continue its downward path and return to pre-pandemic levels by year-end on the back of continued exchange rate stability, improving food supply, and easing energy costs. Real GDP growth is expected to improve modestly in 2026, supported by fiscal reforms, infrastructure investments, and higher oil production.

Nonetheless, the Committee remains alert to residual risks: structural bottlenecks in food supply, potential volatility in oil prices, and possible global policy reversals that could affect capital flows. The CBN shall therefore continue to act with prudence, ensuring that policy adjustments are data-driven, sequenced, and reversible if conditions change.

In summary, this decision to ease the policy stance modestly does not mark a shift to an expansionary stance, but rather a fine-tuning of policy to sustain disinflation and support real sector recovery. The Committee stands ready to deploy all available tools to safeguard macroeconomic and financial stability.

6. LYDIA SHEHU JAFIYA

Introduction

At the 302nd meeting of the Monetary Policy Committee (MPC), I voted to:

1. Reduce the Monetary Policy Rate (MPR) by 50.0 basis points to 27.0 per cent.
2. Adjust the Standing Facilities corridor around the MPR to +250/-250 basis points.
3. Adjust the Cash Reserve Ratio (CRR) for Commercial Banks downward by 500 basis points to 45.0 per cent, while retaining that of Merchant Banks at 16.0 per cent. Introduce a 60.0 per cent CRR on non-TSA public sector deposits.
4. Retain the Liquidity Ratio at 30.0 per cent.

THE GLOBAL ECONOMY

Global economic growth is projected to improve despite existing headwinds including distortions from trade tariffs, increasing policy uncertainties, and geopolitical tensions. July 2025 World Economic Outlook (WEO) projects global growth to increase from 3.0 per cent in 2025 to 3.1 per cent in 2026, from 3.3 per cent in 2024, in anticipation of lower effective tariff rates, better financial conditions, and fiscal expansion in major economies. This is reinforced by the observed improvement in the Global Purchasing Managers Index (PMI) across the Composite, Manufacturing and Services indices.

Global inflation is projected to maintain its strong downward trajectory through 2025 and into 2026, driven by easing demand pressures, lower energy prices, and continued normalization of global supply chains.

Consequently, global headline inflation is projected to moderate to 4.2 and 3.6 per cent in 2025 and 2026, respectively, from 5.7 per cent in 2024 (WEO, July 2025). Downside risks to the outlook stem from trade tariffs, elevated uncertainty, geopolitical tensions and structural rigidities in Emerging Markets and Developing Economies (EMDEs).

Global trade forecast over the review period is mixed. Trade was revised upwards by 0.9 percentage point to 2.6 per cent in 2025 and downwards by 0.6 percentage point to 1.9 per cent in 2026 from 3.8 per cent in 2024 (WEO, July 2025). Key considerations for these projections include persistent policy uncertainties, increasing economic fragmentation, and elevated uncertainty around tariffs.

International financial markets have been stable; exchange rates have been stronger, and global debt tapered in August 2025. More capital flows to EMDEs are envisaged as advanced economies gradually reduce policy rates.

THE DOMESTIC ECONOMY

Real Gross Domestic Product (year-on-year) in Q2 2025 increased by 4.23 per cent from 3.13 per cent and 3.38 per cent in Q1 2025 and Q4 2024, respectively. The growth performance was reinforced by the continued expansion in business activities, as evidenced by the Composite Purchasing Managers' Index (PMI) which at 51.7 index points in August 2025 was above the 50.0 index points benchmark. The oil sector grew by 20.46 per cent in Q2 2025 compared to 1.87 per cent in the preceding quarter. This is on account of increased production, resulting from a combination of enhanced investment in the sector and improved security in the oil and gas producing areas.

Headline inflation (year-on-year) recorded its highest decline in five consecutive months to 20.12 per cent in August from 21.88 per cent in July 2025, largely driven by the moderation in food and core inflation.

In a related development, both components of Headline inflation also declined in the review period. Core inflation (y-o-y) fell to 20.33 per cent in August 2025 from 21.33 per cent in July, driven mainly by relative decreases in the cost of household utilities and energy commodities. Similarly, Food inflation (y-o-y) decreased to 21.87 per cent in August 2025 from 22.74 per cent in July, largely due to relative improvement in food production, buoyed by enhanced security in food-producing belts and seasonal harvests. On a month-on-month basis, headline inflation decreased to 0.74 per cent in August 2025 from 1.99 per cent in July, driven mainly by housing utilities and educational services.

During the review period, the external sector demonstrated resilience, despite ongoing global economic fragmentation and macroeconomic uncertainties. The foreign exchange rate has remained stable, supported by improved market liquidity, improved policy coordination, and positive market sentiment.

The country continued to sustain a positive net Foreign Portfolio Inflows (FPI) on account of improved investor sentiment, enabled by positive real yields, continued reform momentum and effective management of external liquidity risks. Also, the current account recorded a surplus due to an increased surplus in the goods and the secondary income accounts.

The external reserves stood at US$41.62 billion at end-August 2025, up from US$40.51 billion at end-July 2025. This represents 9.10 months of import for goods and services and 13.44 months of import of goods only.

Most of the prudential indicators of the banking system remained within regulatory thresholds, suggesting a strong, stable and resilient system, following the commitment of the central bank to a risk-focused supervisory strategy. It is noteworthy that at the time of this meeting, the Bank's led banking sector recapitalization exercise, has had fourteen (14) banks fully meet the new capital requirements.

CONSIDERATIONS FOR VOTING

At the September 2025 MPC meeting domestic macroeconomic indicators were in strong positive territory. Inflation decelerated for the 5th consecutive month, significant economic growth was witnessed, foreign exchange rate remained stable, and the external reserves grew steadily - buoyed by strong external sector. Indeed, the performance of the domestic economy is reinforced by the global economy, that has witnessed improved output, stable prices, expanded trade, and favourable financial conditions.

Despite the domestic economic recovery, I share the view that in taking decisions, there is need to assess and adequately understand the balance of risks and how they could impact the economy in the near to medium term. There is no gainsaying that risks arising from monetary and structural inflation remain prevalent, necessitating the need to tread cautiously and continue to be guided by data.

It is noteworthy that despite the tight monetary policy stance of the previous meetings, growth performance has been upbeat, reflecting effective monetary and fiscal policy calibration and coordination in the growth and disinflation process.

It remains crucial that, given the improvement in economic conditions, progress in macroeconomic indicators translates into tangible gains for livelihoods and businesses. A cautious adjustment of monetary conditions is required to sustain the progress made so far and to prevent negative impacts on the economy. Such moderate adjustments must also take advantage of the need to maintain a positive real interest rate to retain international competitiveness.

The risk posed by excess liquidity in the banking system is concerning. To prevent inflation resurgence and growth deceleration, the Bank will continue to do what is in the best interest of the economy. However, whilst I voted to introduce a CRR on non-TSA public sector deposits, there is need for careful management of the policy to avoid causing undue stress in the financial markets.

Recognizing the critical role of the interbank market in strengthening financial intermediation, I welcomed the adjustment in the standing facilities corridor as a measure to enhance market efficiency and improve the monetary policy transmission mechanism.

Overall, the fiscal authority remains committed to policy coordination, fiscal sustainability and structural reforms aimed at reducing poverty, strengthening investment attractiveness and promoting greater private sector participation.

Overall, my decision at this meeting reflects confidence in the effectiveness of previous tightening measures and the economy's capacity to sustain stability under current conditions. The Committee's priority for the remainder of 2025 will be to entrench guardrails to safeguard macroeconomic stability, strengthen policy credibility and support a durable inclusive growth path.

7. LAMIDO ABUBAKAR YUGUDA

On 23rd September 2025 at the 302nd Monetary Policy Committee (MPC) meeting, I voted to:

1. Retain the Monetary Policy Rate (MPR) at 27.50 percent;
2. Change the asymmetric corridor around the MPR to a symmetric corridor of +300/-300 basis points;
3. Retain the Cash Reserve Ratio (CRR) at 50 percent for Deposit Money Banks and 16 percent for Merchant Banks;
4. Introduce a CRR of 75 percent for non-TSA public sector deposits; and
5. Retain the Liquidity Ratio at 30 percent.

Most key economic indicators reflect a marked improvement in Nigeria's economic performance. Since the start of Q2 2025, inflation has progressively declined, and the naira exchange rate has become increasingly stable alongside a more orderly foreign exchange market. This suggests that the Central Bank of Nigeria's tight monetary policy is beginning to yield the intended results. Additionally, both gross and net international reserves have risen significantly, driven by higher oil revenues, robust diaspora remittances, and increased portfolio capital inflows.

Global Macroeconomic Developments

The OECD revised its global growth forecast to 3.2 percent for 2025, up 0.3 percentage points from June 2025 projections, while the IMF projects global growth at 3.0 percent in 2025, rising to 3.1 percent in 2026.

Global disinflation is expected to continue as central banks pursue divergent paths to navigate persistent inflation and varying economic conditions. The US Fed cut its policy rate by 25 basis points to 4.00-4.25 percent, the first reduction in nine months with markets pricing in further easing despite August 2025 inflation inching up to 2.90 percent compared to 2.70 percent in July. Inflation in the US is expected to remain above the Fed's target until 2028. The European Central Bank held rates steady (deposit facility at 2.00 percent), expecting inflation to average 2.1 percent in 2025 before declining to 1.7 percent in 2026. The Bank of England maintained its 4.00 percent policy rate amid elevated inflation at 3.8 percent.

Global inflation is projected to moderate to 4.2 percent in 2025 and 3.6 percent in 2026, though this trajectory faces significant risks from elevated trade policy uncertainty and protectionist measures that complicate monetary policy transmission globally. The impact of US tariffs could increase the cost of goods and fuel a resurgence of inflationary pressures.

In global financial markets, rising levels of sovereign debt in advanced economies continue to raise debt sustainability concerns. The US dollar weakened further while gold rallied as central banks increased their purchases and investors sought safer assets.

Crude oil prices are expected to decline throughout 2025 and 2026 as slower demand growth and increased production from both OPEC+ and other producers exacerbate a build-up of inventories. While Nigeria's increasing oil output is expected to insulate it from modest declines in crude oil prices, sharper price decreases could adversely affect revenues, exacerbate exchange rate pressures and depress economic growth.

Geopolitical tensions continue to escalate, with the Russia-Ukraine war now in its fourth year and raising concerns about potential NATO involvement. Meanwhile, the Israel-Gaza conflict has triggered a severe humanitarian crisis and affected several Middle Eastern countries. These conflicts carry significant risks of disrupting commodity and financial markets and could fuel inflationary pressures, making it essential not to underestimate their global economic impact.

Domestic Macroeconomic Developments

Headline inflation decreased to 20.12 percent in August 2025 marking the fifth consecutive month of declining inflation in Nigeria. Core inflation decelerated to 20.33 percent, while food inflation moderated to 21.87 percent.

GDP growth increased from 3.13 percent in the first quarter to 4.23 percent in the second quarter of 2025 supported by a favourable business environment occasioned by increasingly stable macroeconomic conditions.

The oil sector's impressive rebound, expanding by over 20 percent has been particularly significant. This performance, coupled with improved oil production and reduced importation, of refined petroleum products has strengthened Nigeria's external position considerably. Real GDP is projected to expand by 4.25 percent in the 2025 fiscal year.

The current account surplus rose substantially to US$5.28 billion in Q2 2025 from US$2.85 billion in Q1, driven by stronger performance in the goods and secondary income accounts. Gross external reserves increased to US$43.05 billion on September 11, 2025, compared with US$40.51 billion at the end of July, providing a robust buffer equivalent to more than eight months of imports.

The monetary base rose by 8.19 percent year-to-date, with the expansion stemming from higher reserve requirements rather than fresh liquidity injections, thereby exerting minimal pressure on inflation or broad money growth. Broad Money (M3) grew by 5.48 percent, reaching #119.56 trillion, largely due to an increase in Net Foreign Assets (NFA), which also has limited impact on inflation.

Federal Government revenue rose by 12.85 percent to #4,149.10 billion during the period January to June 2025, compared with #3,676.66 billion recorded in H1 2024, largely driven by higher FAAC receipts, which grew by 47.32 percent. Total expenditure surged by 35.12 percent year-on-year, reaching #16,441.32 billion, up from #12,168.33 billion in the corresponding period of 2024. The rise was primarily due to a 39.31 percent increase in recurrent spending, largely attributed to debt service obligations. These trends underscore the imperative for prudent fiscal management to ensure that rising revenues effectively contain growing expenditure and place public debt on a more sustainable trajectory.

The financial sector's resilience is equally noteworthy, with fourteen banks already meeting new capital requirements as recapitalization progresses. This strengthens the foundation for sustained economic growth and financial stability.

Policy Discussion and Outlook

The key takeaway from this evidence is that the tight monetary policy is gradually fostering economic stability, evidenced by moderated inflation, a more stable exchange rate, improved gross and net external reserves, and credible reforms by the CBN that have restored confidence in the foreign exchange market. These developments have supported business investment and significantly boosted GDP growth despite restrictive monetary conditions, while bank resilience and soundness indicators remain strong.

The global and domestic macroeconomic developments present both opportunities and challenges for Nigeria's monetary policy. The US Fed's easing cycle and continuing dollar weakness could support capital flows to emerging markets, including Nigeria. However, divergent central bank policies and persistent global uncertainties necessitate continued vigilance in our policy approach.

The Committee's emphasis on exchange rate stability as a tool for anchoring inflation expectations is well justified. Recent disinflation has been supported by a more stable foreign exchange market, underpinned by rising capital inflows and a surplus in the current account. Looking ahead, inflation is expected to decline further, aided by continued exchange rate stability, steady PMS prices, and the onset of the harvest season, all of which contribute to easing price pressures and reinforcing macroeconomic stability.

The emerging macroeconomic stability has been the result of difficult but necessary decisions and must be carefully preserved. Monetary policy should remain proactive in addressing risks and, when needed, introduce further measures to enhance resilience, deepen disinflation, and anchor inflation expectations. If sustained, the Committee's success could soon pave the way for meaningful monetary easing, creating a solid foundation for sustainable, inclusive, and noninflationary economic growth.

Risks to the Outlook

Although inflation has generally trended downward over the past five months, the slow pace of disinflation and recent volatility in month-on-month headline inflation, as well as year-on-year core and food inflation, indicate that price pressures persist. With Nigeria's economic fundamentals strengthening, these pressures are expected to ease in the coming months, creating room for a significant monetary policy adjustment. However, with headline inflation still above 20 percent, monetary policy must remain focused on driving inflation lower to reinforce the disinflation process and support broader economic stability.

Excess liquidity has been a key driver of inflation and naira depreciation in recent years, with significantly higher FAAC revenue distributions contributing to the problem. In response, the MPC introduced a new policy measure at this meeting in the form of a 75 percent Cash Reserve Requirement (CRR) on non-TSA public sector deposits, to sterilize excess liquidity from this source without disrupting normal financial transactions. This framework should be given time to operate effectively, with any implementation challenges promptly addressed. Its impact will be assessed using incoming data at the next meeting to evaluate its effectiveness in curbing inflationary pressures.

Conclusion

The policy measures that have so far been successfully adopted demonstrate a very credible approach to addressing inflation pressures, managing liquidity, and fostering an environment conducive to business investment and output expansion. The prevailing and new risks discussed at this meeting necessitate maintaining tight monetary conditions and adopting new measures aimed at managing excess liquidity.

I reaffirm my commitment to the achievement of the objectives of the Monetary Policy Committee and the mandate of the Central Bank of Nigeria and attaining a monetary policy framework that balances the dual objectives of price stability and economic growth. As we navigate the complexities of both the domestic and global economic landscapes, I am confident that the MPC's resolute, evidence-based policy making will continue to preserve macroeconomic stability and promote sustainable development in Nigeria.

8. MUHAMMAD SANI ABDULLAHI

My Vote

The September 2025 meeting of the Monetary Policy Committee (MPC) came at a crucial time, as the gains from previous policy actions have begun to translate into measurable improvements in key macroeconomic indicators. Headline inflation eased in August marking a fifth consecutive month of slowing down; external reserves improved; output grew for the second consecutive quarter while exchange rates remained relatively stable for over twelve months. These developments underscore growing traction in macroeconomic fundamentals and justify a contained data driven approach to policy evaluation.

We spent the past several months undertaking a structured evaluation and assessment of policy transmission, while at the same time, diagnosing the constraints and critically interrogating the direction of travel and sustainability of progress achieved. In all of this, data has remained the key driver of our policy actions. Therefore, at this 302nd meeting, I relied on the macroeconomic data and the cumulative effect of prior policy actions, to arrive at my present decision.

Although the latest inflation and output figures released by the NBS are encouraging, the overriding policy priority remains the consolidation of current momentum. The Bank's policy framework remains anchored on monetary and price stability, complemented by macroprudential oversight to preserve financial system stability, while leveraging countercyclical policy instruments to support sustainable and inclusive growth in real output. This requires maintaining a finely calibrated balance between growth-supportive measures and inflation containment to retain already built credibility, safeguard macroeconomic stability and preserve market confidence.

Headline inflation remains high at 20.12% in August 2025 and the upside risks to inflation persist because of developments in the global and domestic macro environments. These include renewed tariff escalation, volatility in commodity markets, and lingering structural deficits, including exchange rate pressures. These dynamics or considerations could slow the disinflation process in many emerging economies. At the domestic scene, the intensity of headline inflation across states in Nigeria shows divergent outcomes even as overall inflation expectations remains a major issue.

In my submission at the last two meetings, I noted that the overarching objective of safeguarding long-term macroeconomic stability remains paramount. In the current context, my assessment is that signaling at this meeting would be growth-enhancing and provide further impetus for growth momentum. This pivotal approach is expected to complement existing policy measures and support GDP performance in Q4 2025 and throughout 2026.

I am also mindful that achieving macroeconomic stability without corresponding real sector growth will undermine the Bank's efforts to date and the sustainability of recent progress. Thus, while we must defend and sustain current stability, monetary policy must extend beyond its short-term stabilization role to provide conditions for sustained growth in the medium-to-long term.

Safeguarding long-term macroeconomic stability while delivering short-term disinflation remains the overarching principle guiding this meeting. The pursuit of price stability must be aligned with the broader objective of promoting inclusive and sustainable economic growth. In my view, monetary policy should operate within a coherent, rules-based framework that anchors inflation expectations and minimizes policy uncertainty. Ensuring policy continuity is therefore critical to consolidating stability and reinforcing market confidence.

In the medium-to-long horizon, the effectiveness of monetary policy in supporting growth also hinges on strengthening transmission mechanisms. This requires deepening money and capital markets, fostering financial inclusion, and enhancing institutional credibility through transparent communication and forward guidance. I share the views of other MPC members that credibility is key and should be guided at all costs. By maintaining credibility and policy consistency, the Bank can mitigate risk perceptions, crowd in private investment, and reinforce the foundations for sustainable economic growth.

With the decision at previous meetings still gaining traction, my inclination at this meeting is to taper with some of the existing parameters, thereby providing headroom to support growth outcomes over the medium-to-long term. My vote at this meeting is supported by current inflation and growth outlook for the economy, performance of the macroeconomic indicators as well as the inflation forecast, and consumer and business expectations. This decision aligns with the prevailing consensus on policy evaluation and underscores the need to critically interrogate the trajectory of policy implementation.

Specifically, I voted to:

1. Reduce the Monetary Policy Rate (MPR) by 50 basis points to 27.00 per cent.
2. Adjust the Standing Facilities corridor around the MPR to +250/-250 basis points.
3. Reduce the Cash Reserve Ratio of Deposit Money Banks to 45.0 per cent from 50.00 per cent and retain that of Merchant Banks at 16 per cent.
4. Introduce a 75 per cent CRR on non-TSA public sector deposits.
5. Keep the Liquidity Ratio unchanged at 30.00 per cent.

My Considerations

Inflation Trends and Dynamics

Data released by the National Bureau of Statistics (NBS) using the 2024 base year, showed the notable progress around inflation dynamics with the fifth consecutive month of observed decline in headline inflation. Headline inflation moderated further in August 2025, declining to 20.12% from 21.88% recorded in July 2025. Both core and food inflation decreased to 20.33% and 21.87% from 21.33 and 22.74%, respectively. Imported food component also declined to 13.17% from 14.65% in August 2025, reflecting stable exchange rate. The observed continued decline in headline inflation is attributable to significant decrease in energy prices and deceleration in the Food and Non-Alcoholic Beverages sector, which accounts for 8.89% year-on-year contribution.

Apart from the slight uptick in July of 2025, food inflation has moderated consistently over the past seven months as Federal Government interventions to ease supply-side rigidities gain traction, with notable price adjustments observed in the review period. However, the principal risk factor for monetary policy remains the persistence of core inflation, necessitating close surveillance and sustained deployment of appropriate policy instruments. As I mentioned at the July meeting of the Committee, the principal risk to the monetary policy outlook is the persistence of core inflation, which underscores the need for vigilant monitoring and sustained application of available policy instruments.

Ongoing initiatives by the Federal Government of Nigeria (FGN) to enhance energy self-sufficiency are expected to reduce energy costs and exert downward pressure on headline inflation, thereby reinforcing the Committee's disinflation strategy. This trajectory aligns with the prevailing tight monetary policy stance, thereby reinforcing the policy transmission mechanism and providing a complementary response to persistent aggregate demand pressures and elevated core inflation.

The past trends reveal that, in terms of composition, the proximity of core inflation (20.33%) to headline inflation (20.12%) signals that price pressures are broad-based across both food and non-food components. Food inflation moderated by 87 basis points to 21.87%, reflecting a partial easing of cost-push pressures, likely attributable to improved agricultural supply conditions. If sustained, this trend could support further disinflation in the near term; however, risks from distribution bottlenecks, climate shocks, and exchange rate pass-through remain material and warrant close monitoring.

Month-on-month, headline inflation decelerated markedly to 0.74% in August 2025 from 1.99% in July 2025, driven largely by a slowdown in food price increases, which moderated to 1.65% from 3.12% over the same period. Conversely, core inflation inched up to 1.20% in August from 1.12% in July, indicating persistent underlying price pressures in the non-food segment. Nigeria's imported food inflation declined for the eighth consecutive month to 13.17% in August, from 14.65% in July, reflecting enhanced efficiency and relative stability in the foreign exchange market.

Findings from the Staff Household Expectation Survey (HES) in August 2025 indicate an improvement in consumer price expectations, with households anticipating a continued deceleration in inflation over the next three to six months. In tandem with the HES, results from the Business Expectations Survey (BES) reflect improved optimism regarding the outlook for the economy as business sentiments across key sectors remained broadly positive, supported by improved foreign exchange liquidity, moderate input cost adjustments, and stronger domestic demand expectations. In my considered view, the convergence of positive household and business expectations presents an opportunity to consolidate disinflation gains while sustaining growth momentum over the near term. Ostensibly, the August 2025 Purchasing Managers' Index (PMI) showed business activities remained in expansion as PMI stood at 51.7 index points compared with 52.7 index points in July.

Given these conditions, my vote to signal calibrated easing at this meeting does not constitute a premature policy relaxation, but rather, a measured response to sustained improvements in inflation dynamics and real sector performance. I shall remain undoubtedly committed to a data-driven and forward-looking stance, which will be reinforced by sustained vigilance to mitigate any possible residual risks associated with persistent core inflation, exchange rate volatility, and supply-side shocks.

Ultimately, improving inflation expectations and strengthening business confidence signal increasing policy credibility. Sustained coordination between monetary, fiscal, and structural policies will be essential to entrench macroeconomic stability and support a durable disinflation path. It is my considered view that the extant disinflation drive will continue to remain the key priority focus of the MPC for the remaining part of 2025 and beyond.

Outlook

The Nigerian economy continues to exhibit considerable resilience amid a persistent global macroeconomic headwind. Real GDP growth is expected to remain positive and broad-based through the remainder of 2025, underpinned by sustained expansion in the services sector. This trajectory reflects the impact of ongoing fiscal reforms, expected recovery in oil production and continuing structural shifts in the composition of aggregate output. In addition, labour market conditions are expected to post modest improvement as participation in productive sectors is enhanced.

The inflation outlook indicates a likely moderation in headline until the end of 2025 as the effect of the MPC's decisions in past four meetings continue to permeate through the system with significant outcomes. Additionally, stability has been sustained in the FX market, and the rebased numbers showed a positive for the second consecutive quarter at 4.32 per cent in Q2 2025 GDP. The travel path is clearer now as the challenges have been substantially identified and addressed.

The fiscal outlook remains stable, supported by modest revenue growth in the review period. However, greater efforts will be required to moderate the fiscal deficits, ease the debt burden, and foster long-term macroeconomic stability. Additionally, boosting non-oil revenues, improvement in oil production is expected to reinforce FGN's fiscal consolidation efforts by enhancing revenue flows and supporting the accumulation of fiscal buffers and a more resilient fiscal framework for the rest of 2025 and beyond.

The near-term outlook for the naira is broadly stable, despite heightened global risks and its potential impact on key foreign exchange inflow channels. The outlook is supported by favourable crude oil price dynamics and strengthened by ongoing improvements in macroeconomic coordination and exchange rate management. The sustained stability in the foreign exchange market is expected to bolster investor confidence, enhance business competitiveness, and contribute positively to real sector performance, as reflected in key Purchasing Managers' Index (PMI) indicators.

The banking sector remains robust with most of the indicators within acceptable thresholds. The Bank will continue to remain vigilant in ensuring the banking system's stability and soundness.

9. MURTALA SABO SAGAGI

Context

Even with structural rigidities and policy coordination issues, especially between federal agencies and states, recent economic indicators signalled encouraging momentum, supporting macroeconomic stability and growth. Key drivers include increased daily crude oil production, enhanced capital inflows, and improved balance of payments position. The naira has achieved stability and is projected to continue appreciating through year-end 2025. The sustained inflation moderation, coupled with the Central Bank of Nigeria's (CBN) commitment to foreign exchange market stability and disciplined liquidity management provided an opportunity for the country to achieve food and energy security in the medium term to support sustainable inclusive economic growth. However, Nigeria cannot afford to pursue its food security strategy largely based on subsistence agriculture and food imports. Also, removing binding constraints to domestic oil production and export of refined petroleum and petrochemical products holds the key to energy security and disinflation. With a disciplined fiscal regime and strategic initiatives that support high priority sector development at sub national levels, productivity improvement, employment generation and significant improvement in security are likely to be witnessed in the second half of 2026. With increasing domestic and global complexities, attention must be placed on the medium-term economic outlook of the country.

Global and Domestic Economic Environment

Global Context

Nigeria's economic recovery prospects remain cautiously optimistic in the presence of persistent global geopolitical tensions. The tension in the Middle East and the ongoing Russia-Ukraine conflict pose elevated risks for global supply chain disruptions, particularly in energy and commodity markets. However, resilient global economic fundamentals have enabled the International Monetary Fund to maintain its revised global growth projection of 3.0 per cent for 2025, representing an improvement from the 2.8 per cent forecast in April 2025. This reflects the global economy's demonstrated capacity to adapt to geopolitical challenges, as global headline inflation is expected to moderate to 4.2 per cent in 2025. These relatively favourable global growth prospects and inflation moderation trends, alongside domestic growth imperatives, have influenced accommodative monetary policy adjustments by many central banks during the second quarter of 2025.

Domestic Environment

improving diplomatic relations between Nigeria and its neighbouring countries is helping the implementation of the African Continental Free Trade Agreement (ACFTA). The recent relative macroeconomic stability has enhanced investor confidence, enabling improved business planning and investment projections. Year-on-year, headline inflation has moderated consistently for five consecutive months, declining to 23.71 per cent, 22.97 per cent, 22.22 per cent, 21.88 per cent, and 20.12 per cent in April, May, June, July, and August, respectively. Nigeria's economic growth is projected to reach 3.2 per cent in 2025, positioning the country among the region's top performers. To accelerate inclusive growth, strategic policy adjustments are required to restore fiscal space, enhance fiscal discipline, promote domestic oil refining capabilities, and further stimulate non-oil production and export diversification.

Major Economic Considerations

1. Capital Flows and Investment Patterns - capital importation increased from US$5.089 billion in Q4 2024 to US$5.642 billion in Q1 2025, indicating enhanced investor appetite for Nigerian equities, bonds, and money market instruments. However, investment allocation to agriculture and manufacturing sectors remains insignificant, with manufacturing attracting only US$0.85 billion in over 27 months.
2. Non-oil export flows: has reached US$3.225 billion, representing a 19.59 per cent increase from the previous year.
3. Oil Production has achieved an average of 1.78 million barrels per day, generating increased foreign exchange inflows.
4. External Reserves: Gross external reserves stood at approximately US$43.0 billion in September 2025, providing effective import cover for up to eight months of goods and services. Reserves level could reach or exceed US$45 billion by Q4 2025.
5. Debt Sustainability - Nigeria's total public debt rose to #149.39 trillion as of March 31, 2025. Increasing debt is a significant source of concern as it squeezes fiscal space.
6. Inflation Outlook - Inflation has moderated throughout most of 2025 and is expected to decline further, supported by anticipated favourable harvest conditions, declining energy prices, and exchange rate stability.
7. Exchange Rate Convergence - The exchange rate premium between the official and Bureau de Change (BDC) markets has narrowed significantly, indicating the near-elimination of decades-long uncertainty and arbitrage opportunities.

My Vote

Given the aforementioned economic developments and the imperative to sustain efforts on the disinflationary process while supporting economic growth, I voted as follows:

• Monetary Policy Rate (MPR): Reduction by 50 basis points to 27.00 per cent
• Standing Facilities Corridor: Adjustment to +250/-250 basis points (symmetric structure)
• Cash Reserve Ratio (CRR): Reduction for commercial banks to 45.0 per cent while maintaining that of merchant banks at 16.0 per cent
• Public Sector Deposits: Introduction of 75.0 per cent CRR on non-TSA public sector deposits
• Liquidity Ratio: Maintained at the current level of 30.00 per cent

Recommendations

While monetary policy has responded appropriately to evolving macroeconomic conditions, the pathway to sustainable inclusive growth requires renewed fiscal discipline and growth-enhancing policy implementation to prevent the reversal of the achieved gains. Hence, there is the need to pay closer attention to the following:

1. Renewed effort on food security: Deliberate multi-layered efforts to stimulate domestic production of farm inputs and technologies, efficient delivery of extension, affordable credit and inputs to farmers, intensification of agro-processing programmes and projects, and restocking the country's strategic food reserves would speed up food security and support disinflation.
2. Promote private investments in the energy sector: Fast tracking the journey towards energy security requires providing enabling environment around oil and power sectors to attract local and foreign investments.
3. Enhanced Fiscal discipline: Inefficient deployment of public resources could undermine the improved macroeconomic stability gains. The need for multifaceted fiscal and monetary collaboration and enhanced oversight is critical.
4. Jobs and wealth creation: The government agenda should prioritize working with states to promote high priority value chains to harness local resources and talents.

10. MUSTAPHA AKINKUNMI

1. Introduction

At the September 2025 MPC, I affirm through vote my strong support for a reduction in the Monetary Policy Rate (MPR) and an adjustment to the Cash Reserve Requirement (CRR) for commercial banks, while maintaining the existing CRR for merchant banks and leaving the Liquidity Ratio unchanged. In addition, I endorse the introduction of a 75 percent CRR on non-Treasury Single Account (TSA) public sector deposits.

This stance is grounded in the recent decline in inflation, the stability of the exchange rate, and encouraging developments in the external sector. Collectively, these trends demonstrate the increasing effectiveness of our monetary policy framework.

We remain fully committed to preserving macroeconomic stability, protecting consumer purchasing power, and promoting inclusive, sustainable economic growth across Nigeria.

2. Economic and Financial Context

Global growth dynamics in Q2 2025 reveal a clear divergence between advanced economies and emerging market and developing economies (EMDEs). Among advanced economies, growth trajectories have become increasingly uneven.

In the United States, economic activity has rebounded from the previous downturn, recording a 3.0 percent growth rate in Q2 2025, unchanged from the previous quarter. This recovery, following a decline that began in Q2 2024, is largely driven by improved trade balances and a notable rise in consumer spending.

Japan continues its steady recovery after the recession experienced in the first half of 2024. Supported by strong export performance, the economy expanded by 2.2 percent in Q2 2025, sustaining its upward momentum.

Conversely, the Euro Area and the United Kingdom have exhibited signs of weakening growth. The Euro Area, after a brief improvement, entered a downward phase beginning in Q1 2025. Similarly, the UK economy, which had shown early signs of recovery, has been on a gradual deceleration since Q3 2024.

In contrast to the mixed outcomes among advanced economies, EMDES have maintained relatively stable growth. China and India remain robust, posting Q2 2025 growth rates of 5.5 percent and 8.0 percent, respectively supported by resilient domestic demand and ongoing structural reforms.

In Sub-Saharan Africa, Nigeria sustained its steady growth trajectory, expanding by 4.23 percent, and driven primarily by gains in the oil and industrial sectors. South Africa, however, continues to face persistent structural constraints and weak investment, with growth struggling to reach 1.0 percent.

Monetary policy developments since August 2025 indicate that most central banks either held or modestly reduced their benchmark policy rates in response to easing inflationary pressures. Egypt made the most pronounced adjustment, cutting its Monetary Policy Rate (MPR) by 200 basis points to 22 percent. Both the United Kingdom and Kenya implemented smaller reductions of 25 basis points, bringing their policy rates to 4.0 percent and 9.5 percent, respectively.

Other major economies, including the United States, Euro Area, Canada, China, Brazil, and South Africa, maintained their existing policy rates through August. However, in September 2025, the United States and Russia joined the easing cycle, reducing their rates by 25 basis points and 100 basis points, respectively. These adjustments brought the U.S. federal funds rate to a range of 4.00–4.25 percent, while Russia's policy rate declined to 17.00 percent.

3. Rational for the Vote

Following the most recent meeting of the Monetary Policy Committee (MPC), Nigeria's economic conditions have continued to strengthen, supported by key macroeconomic indicators that signal improving stability and resilience across the economy.

The economy expanded by 4.23 percent in Q2 2025, representing the highest quarterly growth rate since the onset of the global pandemic. This performance surpassed the growth rates of Q2 2024 and Q1 2025 by 1.04 and 1.10 percentage points, respectively. The strong outturn was largely driven by significant gains in the oil and industrial sectors, which continue to underpin Nigeria's recovery momentum.

Inflationary pressures have begun to ease noticeably. The headline inflation rate declined to 20.12 percent in August 2025 from 21.88 percent, while food inflation fell year-on-year to 21.87 percent from 22.74 percent, and month-on-month to 1.65 percent from 3.12 percent. The moderation in food prices is particularly encouraging, given their substantial weight in household consumption and their strong influence on overall consumer sentiment.

Headline inflation has recorded a consistent downward trajectory since January 2025, culminating in a sharp 1.76 percentage point decline in August 2025—the largest monthly reduction observed this year. This decrease is at least twice the magnitude of any previous monthly decline in 2025. Similarly, food inflation also moderated, falling by 0.87 percentage points in the same month. The simultaneous easing of both headline and food inflation represents a significant milestone in restoring price stability.

The foreign exchange market has shown clear signs of stabilization. The naira appreciated to #1,480 per US dollar as of 26 September 2025, compared to #1,534.45 in July—bringing the exchange rate below the 2025 budget benchmark of #1,500 per dollar. This improvement has helped narrow the spread and reduce volatility, thereby enhancing investor and importer confidence.

At the same time, Nigeria's external reserves strengthened markedly, rising to US$43.05 billion in September 2025, up from US$37.69 billion in June. This represents the highest reserve level since the pandemic period, surpassing the August 2025 peak of US$41.62 billion and exceeding the 2025 eight-month average of US$39.11 billion. The buildup in reserves provides a stronger external buffer, supports exchange rate stability, and reflects improved foreign currency inflows.

The oil sector continues to perform strongly, recording a modest but notable overperformance relative to Nigeria's OPEC production quota. In July 2025, crude oil output averaged 1.51 million barrels per day, slightly above the quota of 1.50 million barrels per day. This uptick in production has contributed positively to foreign exchange earnings and fiscal revenues, while reinforcing confidence in Nigeria's capacity to sustain stable output levels.

The increased crude production has also enhanced foreign currency inflows, particularly in U.S. dollars, thereby complementing the broader efforts to strengthen exchange rate stability and fiscal resilience.

4. Policy Implications and Outlook

Global inflation dynamics point to a broadly improving outlook. Inflation worldwide is projected to decline markedly from 5.7 percent in 2024 to 4.2 percent in 2025, and further to 3.6 percent in 2026. This downward trajectory is largely driven by easing energy prices and the continued normalization of global supply chains.

In advanced economies, inflation is expected to decline modestly by 0.4 percentage points, from 2.6 percent in 2024 to around 2.2 percent by 2026. However, this improvement remains susceptible to downside risks stemming from persistent geopolitical tensions and tariff-related policy uncertainties, which could slow the pace of disinflation.

Among emerging markets and developing economies (EMDEs), inflation is projected to fall more sharply by about 3.2 percentage points over the same period, reflecting the lagged impact of earlier monetary tightening and expected moderation in food and energy prices. Nevertheless, structural fiscal deficits and sustained exchange rate pressures may constrain the extent of inflation easing in several EMDEs.

While the global economy continues its gradual recovery and inflationary pressures ease, regional disparities persist. Progress in inflation control remains uneven across developing economies due to structural bottlenecks and external vulnerabilities. Against this backdrop, many monetary authorities, including Nigeria, are beginning a cautious pivot toward policy easing, suggesting a more optimistic inflation outlook while maintaining vigilance amid ongoing global uncertainties.

Domestically, Nigeria's economic outlook has become increasingly favourable following recent Monetary Policy Committee (MPC) decisions. With inflation gradually moderating, the exchange rate stabilizing, external reserves strengthening, and oil production improving, the economy is gaining traction toward macroeconomic stability.

Empirical evidence further underscores the effectiveness of monetary policy transmission in Nigeria. The correlation between the Monetary Policy Rate (MPR) and inflation stands at 0.84, notably higher than in Ghana (0.66), Egypt (0.58), and Turkey (0.29). Likewise, the relationship between inflation and the Cash Reserve Ratio (CRR) remains strong, at 0.76, highlighting the continued relevance of these instruments in managing liquidity and maintaining price stability.

Nonetheless, persistent structural challenges, particularly in the energy and transportation sectors, underscore the urgent need for targeted reforms to consolidate recent gains and sustain Nigeria's positive macroeconomic trajectory.

5. Conclusion

The recent trajectory of macroeconomic indicators reflects steady and measurable progress toward achieving the Bank's monetary policy objectives. These indicators continue to move in a stronger and more sustainable direction, in clear alignment with our core mandate of maintaining price stability.

This positive trend implies that the same amount of naira now commands greater purchasing power, enabling households to buy more goods and services than at the beginning of the year. The improvement in real purchasing power underscores the effectiveness of the Central Bank's monetary policy tightening measures implemented over the past quarters.

These outcomes have been further reinforced by favourable developments in the real sector, including a reduction in the pump price of Premium Motor Spirit (PMS) and a significant increase in crude oil production, which have both boosted fiscal revenues and strengthened overall economic resilience.

To safeguard these gains and maintain the downward momentum in inflation, the Bank remains firmly committed to proactive policy measures aimed at preventing potential disruptions. In particular, we are closely monitoring excess liquidity within the banking system, especially in light of stronger fiscal revenue inflows to ensure that such liquidity does not compromise our price stability objectives.

Accordingly, I vote to:

• Reduce the Monetary Policy Rate (MPR) by 50 basis points to 27.00 percent
• Adjust the Standing Facilities corridor around the MPR to +250/-250 basis points
• Adjust the Cash Reserve Ratio (CRR) for commercial banks to 45 percent, while retaining the CRR for merchant banks at 16 percent
• Introduce a 75 percent CRR on non-TSA public sector deposits
• Maintain the Liquidity Ratio at 30.00 percent.

11. PHILIP IKEAZOR

For the first time in many months, all key indicators, both absolute and relative, tracking inflation deceleration have aligned with the trajectory of monetary policy. This reflects the effectiveness of the Bank's restrictive stance in curbing general price pressures and stabilizing inflation expectations.

However, persistent fiscal pressures from the sub-national governments now threaten to erode these hard-won gains and risks undermining liquidity management and amplifying inflationary risks. This calls for a decisive policy response, one that integrates fiscal actions with monetary restraint to reinforce macroeconomic stability. A holistic approach is not just prudent, it is imperative.

I therefore voted to:

(1) Reduce the MPR by 50 basis points to 27.0 from 27.50 per cent. (2) Adjust the Standing Facility corridor around the MPR to +250/-250. (3) Reduce the Private Sector CRR of DMBs to 45.00 per cent. (4) Adjust the CRR for Commercial Banks to 45.00 per cent. (5) Retain the CRR of Merchant Banks to 16.00 per cent. (6) Introduce a 75 per cent CRR on non-TSA public sector deposits. (7) Retain the Liquidity Ratio at 30.00 per cent.

Developments in the Global and Domestic Economy

In July 2025, the International Monetary Fund (IMF) revised its global growth projection upward to 3.0 per cent for 2025 and 3.1 per cent for 2026, reflecting a steady but modest improvement in the global economy despite persistent headwinds such as geopolitical tensions, and trade uncertainties associated with the downside risks of potentially higher tariffs.

As the global economy and growth drivers face substantial headwinds, emanating largely from an increase in trade tensions and heightened global policy uncertainty, global inflation is still projected to maintain its downward trajectory through 2025 and into 2026. Headline inflation is expected to ease by 1.5 percentage points in 2025 to 4.2 per cent in 2025 and further by 0.6 percentage point in 2026. This moderation is largely driven by anticipated decline in global demand, energy prices, normalization in labor markets, and the continued resolution of supply chain disruptions. However, ongoing tariff disputes may disrupt trade flows, posing upside risks to the inflation outlook.

To address heightened uncertainty surrounding global growth and inflation, most major central banks opted to maintain their policy rates. Notably, exceptions included the U.S. Federal Reserve and the Central Bank of the Russian Federation, both of which implemented rate cuts at the end of the third quarter of 2025.

The domestic economy remains resilient, with the adverse effects of international commodity price fluctuations and exchange rate-induced inflationary pressures showing signs of moderation. However, persistent global economic uncertainty continues to threaten Nigeria's export performance. Disruptions in global supply chains have exacerbated imported inflation and further constrained the country's already limited fiscal space.

The upward revision of global growth, alongside projected moderation in inflation, relative progress in tariff negotiations, improved global financial conditions, and expanded fiscal spending, is expected to generate positive spillover effects for the Nigerian economy. A decline in global inflation could ease imported inflationary pressures, especially in food and manufactured goods.

My Considerations

Nigeria's economy has regained stability, driven by steadfastly applied reforms. Growth will now gain traction as pressures from foreign exchange and inflation show signs of easing. In the second quarter of 2025, the real gross domestic product expanded by 4.23 per cent year-on-year, an improvement of 1.01 percentage points over the 3.13 per cent recorded in the first quarter.

We have observed encouraging macroeconomic progress, marked by the continued monitoring of the foreign exchange market, declining inflation and stable exchange rate, clear indicators of the effectiveness of our monetary policy. These measures have successfully anchored inflation expectations and curbed volatility in the foreign exchange market. Consequently, there is strong evidence to suggest that the economy is now on a sustainable trajectory which is further affirmed by the broad-based moderation by a monthly average of -0.63 per cent across key inflation indices, including headline, core, food, and imported inflation.

The foreign exchange market has demonstrated continued resilience, with an average appreciation rate of 0.05% across both the NFEM and BDC windows. This reflects a zero premium and is supported by a robust increase in average turnover rate of 58.45 per cent in the third quarter of 2025. Additionally, a 51.25 per cent reduction in exchange rate volatility between the second and third quarters of 2025 has further reinforced market stability without exacerbating fluctuations.

Despite the strong policy alignment of the macroeconomic fundamentals to the CBN monetary policy stance, there are strong indications that while, the Bank's policy tools, the rates, are effectively guiding and signaling the markets, the average Open Repo Rate (OPR) stood at 26.50 per cent reflecting high liquidity levels in the banking system, even though it continues to stay within the asymmetric corridor.

The mounting liquidity pressure is reflected in a 34.52 per cent average increase in banks' monthly balances, largely driven by FAAC disbursements. This coincides with a sharp 60.96 per cent decline in the average monthly Standing Lending Facility (SLF), while the Standing Deposit Facility (SDF) rose by 29.08 per cent between July and August. Collectively, these movements indicate an average liquidity pressure of 31.88 per cent, based on the differential between liquidity injections (SDF) and withdrawals (SLF), thereby escalating the cost of liquidity management.

It is concerning that the influence of FAAC disbursements on wide system liquidity has given rise to a liquidity management paradox, where an increase in the Cash Reserve Ratio (CRR) coincides with a rise in banking system liquidity. This unusual correlation reflects the sustained liquidity injections from sub-national governments, evidenced by a 40.84 per cent increase in FAAC revenue during the first eight months of 2025 compared to #1,202.14 billion in the same period of 2024, coupled with a compensatory adjustment by banks, expanding their holdings of specialized liquidity assets (SLA) in response to the sterilizing effect of the Cash Reserve Ratio (CRR).

As the Central Bank of Nigeria maintains its tight monetary stance to address this liquidity paradox, the resulting impact has been a 1.0 per cent contraction in gross credit alongside a widening interest rate spread between average lending and deposit rates between July and August 2025.

I acknowledge that in February 2016, the Bank introduced guidelines for the establishment of a Treasury Single Account (TSA), aimed at encouraging state governments to adopt sound liquidity management practices that minimize fiscal shocks and support effective monetary policy implementation.

However, despite this initiative, fiscal surprises and excessive liquidity injections by sub-national governments have persisted, particularly following the shift to optimal pricing of petroleum products in 2023. In response to these challenges, I voted for the reintroduction and adjustment of the public Cash Reserve Requirement (CRR) as a corrective measure.

In tackling liquidity challenges stemming from the fiscal sector, it was equally important to re-calibrate the money market and reinforce the transmission mechanism of monetary policy. Accordingly, the shift from an asymmetric to a symmetric interest rate corridor was designed to tighten excess liquidity in the banking system. Coupled with the anticipated effects of the reintroduced and refined public sector Cash Reserve Requirement (CRR), this policy adjustment aims to make the money market more responsive, lower the cost of liquidity management, and improve the overall effectiveness of monetary policy.

To mitigate risks in the conduct of monetary policy and send a clear signal to the market, it became necessary to ease pressure on the banking system and address the investment costs stemming from previous monetary restraints. The support for the reduction in the private sector Cash Reserve Requirement (CRR) for commercial banks was a strategic move to unlock credit, stimulate economic activity, and foster sustainable growth.

In conclusion, the positive effects of coordinated monetary and fiscal policies are beginning to materialize, as reflected in the concurrent decline in general price level indices. However, economic growth remains fragile, and several drivers behind the recent moderation in inflation have yet to reach a sustainable trajectory. Therefore, fiscal authorities must persist in tackling structural challenges and advancing key growth enablers that lie beyond the scope of monetary policy, while also curbing fiscal surprises, particularly those arising from autonomous spending.

12. OLAYEMI CARDOSO

Governor of the Central Bank of Nigeria and Chairman, Monetary Policy Committee

As with all others, the September 2025 meeting of the Monetary Policy Committee (MPC) was an important gathering that allowed us to take stock of the latest economic developments and, more importantly, provide the market with guidance on how we see the economy unfolding in the near future. Whilst we may not hold a crystal ball, I believe this MPC has shown its increasing ability to rigorously analyse data, interrogate the critical issues confronting us, and apply our collective insights to arrive at reasonably reliable forecasts of the direction of the economy. We should not take this for granted and we must continue to ensure that our outlook and decisions are shaped not by what we see today, but by data-driven expectations and evaluation of the balance of risks on the horizon to avoid any economic surprises.

The Nigerian economy is showing positive developments across board, and we are witnessing clear signs of progress and improving macroeconomic stability. Aggregate prices continue to moderate, with the sharpest drop in headline inflation recorded in August 2025 even as output showed stronger resilience. A further widening of the trade surplus was recorded in the second quarter and the foreign exchange market has maintained its relative stability over the year. Accretion to external reserves continued a positive trajectory, increasing economic buffers and boosting investor confidence in the economy.

With these achievements in view, the discussions at this meeting take on a new dimension. Having attained a degree of macroeconomic stability, the questions before us revolve around what we need to do to defend the stability we have achieved, especially knowing that it is a fragile phenomenon that can be lost very quickly given a wrong turn of events. It is also important to emphasise that there is no lasting growth without stability, and our ability to continue fostering a stable environment is the bedrock of investor confidence. We recognize that this process is more of a journey than a short dash, hence we must continue to be willing to do whatever is required, and our policy actions must also be unambiguous, explainable, and seen by economic agents as being in the best interest of the economy. Striking the balance between this and the pursuit of growth and the soundness of the financial system is what gives meaning and credibility to our policy actions.

Diminished uncertainties on the global scene and the toned-down rhetoric on tariff wars have led to an upward revision in global output and growth across both advanced and developing economies. Inflation is forecasted to continue its moderation on the back of cooling energy prices and muted conditions in labour markets, keeping central banks and monetary authorities firmly on an easing bias.

On the domestic front, the latest figures on prices and output project a sustained resilience of the economy and forecasts indicate a continuity on this trajectory, giving rise to more optimism. Headline inflation eased to 20.12 per cent in August from 21.88 per cent in July, with both food and core inflation showing declines. The monthly figures also dropped, helped by lower prices of food staples such as rice, maize, guinea corn, and millet. On the output side, real GDP grew by 4.23 per cent in the second quarter compared with 3.13 per cent in the first, driven in part by a sharp rebound in the oil sector which expanded by over 20 per cent.

These notwithstanding, there are a number of concerns on the horizon, not least of which is the significant increase in statutory distribution of revenues to sub-nationals and the impact this could have on liquidity levels in the banking system and the fiscal outturn. These developments pose a risk to the outlook, coupled with continued vulnerabilities of the economy to external shocks (e.g. commodity price declines) that may arise from adverse global events; hence, we must be wary of any easing of policy stance that may reverse the disinflationary trend.

The elevated threat posed by excessive liquidity injections from the public sector on our fight to moderate inflation is one that necessitates the adoption of a more proactive and targeted response. We must not allow excess liquidity and any fiscal loosening ahead of the political election cycle to compound inflationary pressures in the economy or threaten the stability of the foreign exchange markets, like we witnessed in the recent past. As bankers to the government, the CBN has the operational and statutory capacity to handle the banking business of all tiers of government and agencies in a manner that is more efficient and reduces the risks to inflation. The initiative for all government funds to be managed under the Treasury Single Account (TSA) framework by the CBN must be encouraged, in the first instance, to complement the tight policy stance of the MPC and break the vicious cycle of using costly monetary tools to sterilize government liquidity.

Globally, although output is expected to strengthen, the outlook is still far from settled. Geopolitical tensions and unresolved trade disputes continue to threaten supply chains and could weigh on economic growth. Inflation is projected to slow further, though the pace of moderation will likely be uneven, shaped by tariffs and other structural pressures.

These developments underscore the need for caution and, for countries like Nigeria, the message is to remain steady, keep our policy grounded in evidence, and stay alert to shocks from the global environment while protecting the stability we have worked hard to build at home.

In weighing the options before us, I found the case for a modest cut in the Monetary Policy Rate (MPR) to be convincing. Inflation has slowed for five consecutive months, and staff projections indicate further declines through to the end of the year. A 50-basis point reduction to 27.0 per cent, in my judgment, would not endanger stability.

The introduction of a public sector specific Cash Reserve Requirement (CRR) also carries significant merit and is a step that is expected to drive the right behaviours and result in better liquidity management practices across the financial system. The decision to commence a 75 percent CRR regime on non-TSA public sector deposits creates some room to lower the reserve requirements on other deposit liabilities without jeopardizing our overarching objectives, as it allows some liquidity to reach the private sector while still maintaining a firm grip on the risks of excess money supply in the system.

Similarly, I supported adjusting the Standing Facilities corridor to a +250/-250 basis points range around the policy rate, as a more active interbank market is crucial to making our policy effective.

In summary, I voted as follows:

1. Reduce the Monetary Policy Rate (MPR) by 50 basis points to 27.00 per cent.
2. Adjust the Standing Facilities corridor around the MPR to +250/-250 basis points.
3. Adjust the CRR for commercial banks to 45 per cent while retaining that of merchant banks at 16 per cent. Introduce a 75 per cent CRR on non-TSA public sector deposits.
4. Keep the Liquidity Ratio unchanged at 30.00 per cent.

Taken together, these actions offer balance, but the impact must be constantly evaluated over the coming months to ensure the desired outcomes are being delivered. The MPC will remain alert and ready to make any necessary adjustments to ensure loose monetary conditions do not creep into the economy and derail our efforts to maintain price stability.

OLAYEMI CARDOSO Governor September 2025