When the Financial Coverage Committee (MPC) of the Central Financial institution of Nigeria (CBN) concluded its 303rd assembly on November 25, 2025, the message it delivered was clear: Nigeria has entered a brand new section of financial consolidation, one which prioritises stability, disciplined liquidity administration, and redirected credit score to the actual financial system.
After months of regular disinflation, rising international reserves, stronger capital inflows and improved investor confidence, the Committee opted not for dramatic modifications in headline charges however for a deeper structural adjustment — one which re-engineers how banks behave throughout the cash market.
The Committee retained the Financial Coverage Price (MPR) at 27 p.c, a continuation of the tight financial stance required to maintain inflation on a downward path. However past this well-telegraphed resolution was a much more consequential shift: the adjustment of the standing facility hall across the MPR to +50/-450 foundation factors.
That single coverage motion, although technical, may form the monetary system extra considerably than headline price actions. It’s a deliberate recalibration designed to create new incentives, get rid of outdated distortions and be sure that liquidity throughout the banking system flows to locations the place it could possibly stimulate sustainable development.
Governor Olayemi Cardoso, addressing journalists after the MPC briefing, positioned the choice inside a broader narrative of reforms which have stabilised FX markets, boosted reserves, strengthened investor confidence and restored self-discipline throughout the monetary system. “Now we have moved from a scenario the place there’s instability,” he stated. “And after stability comes funding, and after funding comes development. What we don’t want is something that’s short-term and can’t be sustained.”
Rewiring the incentives
By widening the hall across the MPR, the CBN successfully makes it much less engaging for banks to maintain cash idle within the Standing Deposit Facility—the place they earn considerably decrease returns than earlier than. This alteration forces banks to rethink liquidity methods that, for years, allowed them to make comfy, risk-free earnings just by inserting surplus funds with the apex financial institution. With the brand new construction, such passive behaviour turns into unprofitable.
That is an intentional push towards larger engagement with the productive sectors. Banks should now allocate extra liquidity to lending—for manufacturing, agriculture, providers and SMEs—or spend money on authorities securities, which additionally help broader financial stability.
The adjustment compels motion away from arbitrage-driven placement exercise and towards risk-assessed, growth-enabling credit score.
In essence, the CBN is restructuring the complete reward system of the banking trade. Liquidity should now work. It should flow into. It should contribute to productive output reasonably than sit in risk-free vaults incomes curiosity. That is the center of the MPC’s place: a banking system that features as an engine of financial growth, not merely a repository of idle funds.
One of many long-standing challenges in Nigeria’s financial setting has been uneven liquidity circulation. Banks usually favor holding positions with the CBN as an alternative of lending to the actual financial system or taking part within the interbank market. The hall adjustment straight addresses this inefficiency. With deposit placements now sharply de-incentivised, banks will discover it extra rewarding to commerce liquidity amongst themselves or lengthen credit score to shoppers.
This alteration deepens interbank exercise, improves liquidity redistribution and ensures a extra lively cash market. A vibrant interbank system not solely helps credit score allocation but in addition strengthens the transmission of financial coverage.
Rates of interest throughout markets—whether or not treasury payments, business lending or in a single day placements—start to maneuver extra constantly with the MPR. A clearer alignment between coverage intent and market response enhances the effectiveness of financial administration.
It additionally helps the CBN’s broader combat towards inflation. By preserving short-term cash market circumstances tight and decreasing idle liquidity, inflationary pressures are higher managed. Cash provide turns into sufficiently contained with out undermining official credit score growth. The construction due to this fact achieves steadiness—agency in its anti-inflation stance however supportive of financial productiveness.
For years, distortions existed between the charges banks earned from the CBN and the charges they charged costomers and companies. These distortions typically inspired arbitrage—making the most of risk-free placements reasonably than lending. The brand new hall eliminates this incentive. Banks should now function from a place of self-discipline, competitiveness and effectivity.
Borrowing from the CBN has additionally change into costlier, compelling banks to handle liquidity proactively and keep away from pointless dependencies on the apex financial institution’s in a single day window. The system rewards cautious planning, prudent treasury operations and strong inner liquidity administration. A extra disciplined banking trade reduces systemic vulnerabilities and strengthens total monetary stability.
This aligns with the continuing recapitalisation programme, which Cardoso described as important for constructing buffers throughout the trade. “Sixteen banks have absolutely complied, whereas 27 others have raised capital,” he stated. “From each indication, it’s entering into the best trajectory. We’re constructing a monetary trade that shall be very match for objective.”
Collectively, recapitalisation and the brand new hall construction reinforce one another: one strengthens steadiness sheets whereas the opposite enforces extra accountable liquidity behaviour.
Supporting inflation moderation and Naira stability
The Committee’s resolution got here within the context of seven consecutive months of inflation deceleration. Headline inflation slowed to 16.05 p.c in October, down from 18.02 p.c in September. Meals inflation fell sharply, supported by improved harvests, a secure trade price and sustained coverage tightening. Core inflation additionally moderated.
The MPC is assured that earlier coverage actions are nonetheless transmitting by the financial system. Thus, retaining the MPR whereas adjusting the hall permits these results to deepen. The construction ensures that cash market charges stay tight sufficient to help the disinflation pattern. On the similar time, the steadiness of the naira—pushed by reforms which have made the FX market open, clear and market-driven—creates a extra predictable setting for companies and international traders.
Cardoso strengthened this through the briefing, noting that each day international trade market turnover now averages $500 million, usually with out CBN intervention. The slim 2 p.c unfold between official and BDC charges displays a stage of stability that had been elusive for years. “It’s a extra disciplined market,” he stated. “There may be coverage consistency and no flip-flop. Everybody can see who’s shopping for and promoting.”
Such transparency boosts confidence, reduces hypothesis and helps the disinflation course of.
The hall adjustment will not be solely about financial management; it’s a growth-enabling intervention. By pushing banks towards lending, the MPC is positioning credit score because the engine for Nigeria’s subsequent section of financial growth. GDP development already exhibits momentum, rising to 4.23 p.c in Q2 2025, whereas the Buying Managers’ Index hit a five-year excessive of 56.4 factors in November—a sign of elevated enterprise exercise and improved sentiment.
As credit score begins to flow into extra successfully, productive enterprises achieve the liquidity wanted to develop operations, rent employees, and improve output. SMEs, usually constrained by restricted entry to credit score, stand to profit considerably from a extra lively lending setting. Authorities securities additionally take up extra liquidity, supporting fiscal operations and decreasing strain on the broader monetary system.
This aligns with Governor Cardoso’s message that investor confidence will increase when markets stay secure and well-regulated. The elimination of Nigeria from the FATF gray listing, upgrades by ranking companies and rising exterior reserves—all level to an financial system shifting in the best course. “We’re constructing reserves on a systemic foundation,” he defined. “Portfolio traders discover Nigeria engaging as a result of we’re working a extra open and clear system.”
Cardoso additionally emphasised the important collaboration between fiscal and financial authorities—a partnership that has strengthened reforms throughout numerous sectors. The presence of the Everlasting Secretary of the Ministry of Finance on the MPC displays this high-level coordination. Joint committees work frequently to make sure coverage alignment, significantly as Nigeria strikes towards a full inflation-targeting framework.
“Probably the most environment friendly manner for us to attain our goals is joint collaboration,” he stated. “It’s that collaboration that has introduced the steadiness we see right now, and we aren’t about to lose it.”
The adjustment of the standing facility hall marks a crucial evolution in Nigeria’s financial coverage framework. It’s a strategic resolution that helps disinflation, reinforces stability, encourages productive lending and enriches the transmission of coverage indicators throughout the monetary system.
By discouraging idle liquidity and incentivising banks to help the actual financial system, the MPC has positioned financial coverage as a catalyst for productiveness, job creation and sustainable development.
In a panorama the place stability is lastly taking root, the choice sends a message of confidence, self-discipline and strategic foresight—one which aligns Nigeria’s financial system with world greatest practices and units the inspiration for a extra resilient, growth-driven financial system.
