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The short answer
The CBN sets its main policy rate, the Monetary Policy Rate (MPR), at meetings of its Monetary Policy Committee, which normally meets about every two months. The MPR anchors a corridor of standing lending and deposit rates, and the CBN backs it with the cash reserve ratio, liquidity ratio and open market operations, which together push money-market, deposit and loan rates up or down.
The Monetary Policy Committee
Under the CBN Act 2007, monetary policy decisions are taken by the Monetary Policy Committee (MPC). It is chaired by the CBN Governor and includes the deputy governors, board members and external members appointed for their expertise. The committee reviews inflation, growth, the exchange rate, credit and fiscal conditions, then votes. Its decisions are published in a communiqué read at a press briefing on the second day of the meeting, and personal statements by members are released later.
The tools, in one table
| Tool | What it is | How it works |
|---|---|---|
| Monetary Policy Rate (MPR) | The CBN's headline policy rate | Signals the cost of central bank money; other rates are set relative to it |
| Asymmetric corridor | A band around the MPR | Banks can borrow from the CBN overnight at the top of the band (standing lending facility) and deposit spare cash at the bottom (standing deposit facility) |
| Cash reserve ratio (CRR) | A share of deposits banks must keep at the CBN, unremunerated | A higher CRR leaves banks less to lend or invest |
| Liquidity ratio | Minimum share of liabilities held in liquid assets | Ensures banks can meet withdrawals; raises demand for treasury bills |
| Open market operations (OMO) | CBN sells or buys its own bills | Selling OMO bills drains naira from the system and lifts short-term yields |
Recent settings
The table records the key settings announced at recent MPC meetings that we could confirm from CBN communiqués. Settings change at every meeting, so check the latest communiqué.
| MPC meeting | MPR decision | CRR (commercial banks) |
|---|---|---|
| February 2024 | Raised to 22.75% | Raised to 45% |
| September 2024 | Raised to 27.25% | Raised to 50% |
| November 2024 | Raised to 27.50% | 50% |
| September 2025 | Cut to 27.00% | Cut to 45% |
| November 2025 | Held at 27.00% | 45% |
What a communiqué contains
Each communiqué follows a similar shape: a review of global conditions, domestic output, inflation, money and credit, the external sector and the banking system, then the committee's considerations and its decisions. It records how many members voted for each option. Personal statements published afterwards show each member's reasoning, which analysts use to judge whether the next move is likely to be a hold, a hike or a cut.
The rhythm of a meeting
- The CBN publishes the year's MPC calendar in advance, usually two-day meetings.
- Day one: staff present data and forecasts; members discuss.
- Day two: members vote and the Governor reads the communiqué at a press briefing in the afternoon.
- Within weeks: members' personal statements are published on the CBN website.
How a rate decision reaches you
The MPR is not the rate on your loan. It moves other rates through several channels:
- Interbank rates. Overnight and open-buy-back rates between banks move within the corridor, depending on how much cash is in the system.
- Treasury bill and OMO yields. When the CBN tightens, auction stop rates usually rise. See how T-bill auctions work.
- Deposit rates. Banks compete for funding, so fixed deposit and savings rates tend to follow, often with a lag and not one for one.
- Loan rates. Banks price loans from their cost of funds plus a margin for risk and operating costs. A higher CRR raises that cost because part of every deposit earns nothing.
- Exchange rate. Higher naira yields can attract portfolio inflows, which affects the market exchange rate.
Worked example: why CRR matters (example figures)
A bank takes in ₦1,000,000 of deposits. With a 45% CRR it must place ₦450,000 at the CBN, leaving ₦550,000 to lend or invest. If it pays depositors ₦100,000 a year in interest, that cost is spread over ₦550,000 of earning assets, so the effective cost of funds is about 18.2% rather than 10%. Banks pass much of that through to borrowers.
Why the CBN raises or cuts
The CBN's main legal objective is price stability. When inflation is high or expected to rise, the MPC usually tightens (raising the MPR, CRR or OMO sales) to slow credit growth and support the naira. When inflation is falling and growth is weak, it may cut. Real interest rates, the gap between the MPR and inflation, are watched closely; our page on real returns in Nigeria shows how to compare a rate with inflation, and how inflation is measured explains the CPI the MPC looks at.
Monetary policy also interacts with fiscal policy and the foreign exchange market. Large government borrowing from the domestic market, for example, competes with private borrowers for bank funds and can keep yields high whatever the MPR. Since the 2023 to 2024 foreign exchange reforms, the CBN has also used tight naira liquidity to support the exchange rate, which is why OMO sales and the CRR have been as important as the headline MPR. Changes in the MPR typically take several months to show up fully in inflation, so the committee is always setting policy for conditions it expects, not only the latest figure.
Questions people ask
What is the MPR in Nigeria?
The Monetary Policy Rate is the CBN's benchmark policy rate, set by the Monetary Policy Committee. It anchors the rates at which banks borrow from and deposit with the CBN overnight.
How often does the CBN MPC meet?
The MPC normally meets about six times a year, roughly every two months, and publishes its schedule in advance on the CBN website.
Does the MPR decide my bank loan rate?
Not directly. Banks set loan rates from their cost of funds, risk and margin. The MPR, CRR and treasury bill yields influence that cost.
What is the cash reserve ratio?
The CRR is the share of deposits a bank must keep with the CBN, earning no interest. It limits how much of each deposit the bank can lend.
Sources
- Central Bank of Nigeria (CBN) · accessed Oct 2026
- CBN Monetary Policy Committee communiqués · accessed Oct 2026
- Central Bank of Nigeria Act 2007 · accessed Oct 2026
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