The Monetary Policy Committee of the Central Bank of Nigeria has widened the asymmetric corridor around the Monetary Policy Rate (MPR) and tightened its oversight over banking sector liquidity with a new Cash Reserve Ratio policy to curb excess cash and strengthen interbank market efficiency.
At the Monetary Policy Committee (MPC) meeting on September 22 to 23, 2025, the committee adjusted the Standing Facilities corridor around the MPR to +250/-250 basis points, aiming to improve interbank market efficiency and monetary policy transmission.
The corridor sets the rates at which banks can deposit with, or borrow from, the CBN on an overnight basis. Adjusting it encourages more interbank transactions and supports market stability.
The MPC also directed that banks keep 75% of public sector funds not held in the Treasury Single Account (TSA) with the CBN. This measure targets the excess cash generated by government spending, particularly fiscal disbursements.
The Committee said the decision was prompted by the persistent build-up of liquidity in the banking system, largely due to improved revenues.
To maintain economic stability, the MPC highlighted the risks posed by excess cash in the banking sector and stressed that a strong interbank market is essential for effective policy transmission.
This led to the adjustment of the standing facilities corridor and the CRR to boost interbank transactions and enhance market stability.
