Finally, CBN Cuts Interest Rate by 50 Basis Points to 27%

By Adedapo Adesanya

The Central Bank of Nigeria (CBN) has cut its key interest rate by 50 basis points, after inflation fell for five consecutive months.

The cut, carried by the Monetary Policy Committee (MPC), is the first since the COVID-19 pandemic in 2020.

This expected cut comes amid slowing inflation and a recent strengthening in the Naira.

The 12-member MPC lowered the benchmark rate to 27 per cent from 27.5 per cent, Governor Olayemi Cardoso told journalists at a briefing in the nation’s capital, Abuja, on Tuesday.

Last week, Nigeria’s annual inflation rate eased to 20.12 per cent in August from 21.88 per cent in July, the National Bureau of Statistics (NBS) said on Monday.

The statistics office said the August 2025 headline inflation rate decreased by 1.76 per cent compared to the July 2025 headline inflation rate.

Inflation indicators compare prices of goods and services over 12 months. A decline does not necessarily imply a reduction in prices; instead, it shows the rate of price increase had fallen compared to previous months.

On a year-on-year basis, the bureau said the headline inflation rate was 12.03 per cent lower than the rate recorded in August 2024 (32.15 per cent).

This shows that the headline inflation rate (year-on-year basis) decreased in August 2025 compared to the same month in the preceding year (i.e., August 2024), though with a different base year, November 2009 = 100.

The NBS said on a month-on-month basis that the headline inflation rate in August 2025 was 0.74 per cent, 1.25 per cent lower than the rate recorded in July 2025 (1.99 per cent).

“This means that in August 2025, the rate of increase in the average price level was lower than the rate of increase in the average price level in July 2025,” it said.

The report also said the food inflation rate in August 2025 was 21.87 per cent yearly. This was 15.65 percentage points lower compared to the rate recorded in August 2024 (37.52 per cent).

For the Naira, it has strengthened above N1,500 per Dollar, boosted by positive interventionist mechanisms and solid policy background.