For the first time this year, the Central Bank of Nigeria has nudged interest rates down. The Monetary Policy Committee (MPC) voted to cut the Monetary Policy Rate (MPR) by 50 basis points, moving it from 27.5 per cent to 27 per cent.

Governor Olayemi Cardoso announced in Abuja on Tuesday at the close of the Bank’s 302nd MPC meeting. The decision comes after three straight pauses and follows last year’s flurry of six consecutive hikes.

So, why the change of heart? According to Cardoso, the cut was backed by five months of steady disinflation and projections that inflation would cool further in the months ahead. The Bank is also keen to give economic recovery a little more breathing room.

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But the MPR tweak was only part of the story. The MPC also decided to tighten its grip on banks. Commercial banks will now keep 45 per cent of deposits locked up as reserves, up from the previous level, while merchant banks remain at 16 percent. On top of that, a hefty 75 percent reserve requirement will apply to public sector deposits outside the Treasury Single Account. Liquidity ratio? That stays unchanged at 30 per cent.

Cardoso explained that these adjustments are meant to improve the efficiency of the interbank market and ensure monetary policy actually bites where it should. In other words, the CBN wants to appear flexible on rates without letting too much cash flood the system.

The rate cut might feel small today for business and households, but it could signal the start of gentler conditions ahead. The real question now is whether this marks the beginning of an easing cycle or just a cautious nod to Nigeria’s fragile recovery.

Either way, after months of holding its ground, the CBN has finally blinked.

Anita Chinedu