CBN data shows liquidity rising on strong domestic credit growth even as foreign assets weaken and MPC holds rates to safeguard disinflation…
Nigeria’s broad money supply climbed to N119.04tn in October 2025, up from N117.78tn in September, according to fresh figures released by the Central Bank of Nigeria. The increase of N1.25tn, or 1.06 per cent, marked a rebound from the slowdown recorded a month earlier.
Year-on-year, broad money supply (M3) expanded by N11.04tn, representing a 10.22 per cent rise from N107.99tn in October 2024, a sign that liquidity continues to build in the financial system despite the CBN’s generally tight monetary posture.
The October rise followed the Monetary Policy Committee’s decision in September 2025 to cut the Monetary Policy Rate by 50 basis points to 27 per cent, the first rate reduction since 2020 after inflation began to moderate and foreign exchange conditions improved.
Broad money, which includes narrow money, quasi-money, and other liquid balances, strengthened further in the month under review, signalling increased cash and near-cash availability even as the central bank attempted a cautious easing without triggering a resurgence in inflation.
A major driver of the growth was a sharp jump in net domestic assets, which rose to N84.23tn in October from N76.12tn in September. The N8.11tn increase equivalent to 10.65 per cent month-on-month reflects rising domestic credit, including higher government borrowing and increased bank claims on the private sector.
This expansion offset a significant decline in net foreign assets, which fell from N41.66tn in September to N34.80tn in October, a drop of N6.86tn or 16.45 per cent. Despite the month-on-month fall, net foreign assets remained N14.01tn higher than the same period last year.
Money supply measured as M2 also rose modestly, increasing by N1.25tn or 1.06 per cent from N117.77tn in September to N119.03tn in October. On a year-on-year basis, M2 increased by N11.04tn, aligning with the broader money supply trend.
Narrow money (M1) posted a smaller rise, inching up by N239bn from N39.11tn in September to N39.35tn in October, a 0.61 per cent increase. Year-on-year, M1 grew by 13.12 per cent, adding N4.56tn.
The data suggests that the liquidity boost in October was driven primarily by domestic dynamics rather than foreign inflows, with strong NDA growth overshadowing weakening foreign asset positions.
The report comes after the CBN held the benchmark interest rate at 27 per cent during its November 2025 MPC meeting, signalling caution as policymakers work to preserve recent disinflation gains.
CBN Governor Olayemi Cardoso announced the decision after the committee’s 303rd meeting in Abuja, where all twelve members were present. Cardoso said the MPC voted overwhelmingly “to maintain the monetary policy stance,” noting that earlier decisions required more time to permeate the economy.
The MPC also adjusted the policy corridor to +50/-450 basis points, maintained the Cash Reserve Ratio at 45 per cent for deposit money banks, 16 per cent for merchant banks, and 75 per cent for non-TSA public-sector deposits, while keeping the liquidity ratio unchanged at 30 per cent.
According to the MPC communiqué, the stance was aimed at “sustaining progress towards low and stable inflation,” while future decisions would be “evidence-based and data-driven.”
The CBN reported that inflation had slowed for seven consecutive months, falling from 34 per cent a year earlier to 16.05 per cent in October. Food inflation eased to 13.12 per cent, while core inflation moderated to 18.69 per cent.
The Bank attributed the disinflation trend to continued monetary tightening, improved FX market stability, rising capital inflows, and relative stability in fuel prices.
Speaking after the meeting, Cardoso said stabilising prices was only the first step in rebuilding economic confidence. “To the extent that we have accomplished stability, stability is a very fundamental process in the road to growth,” he said.
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