Money supply growth slows to four-year low as CBN tightening curbs inflation

The growth rate of Nigeria’s money supply slowed to a four-year low of 12.83 per cent in November 2025, reflecting aggressive liquidity mop-up measures by the Central Bank of Nigeria (CBN) aimed at taming inflationary pressures.

Data released by the apex bank showed a sharp moderation in broad money supply growth after years of rapid expansion.

Growth slowed from 15.26 per cent in 2021 to 21.34 per cent in 2022, surged to 39.33 per cent in 2023 and peaked at 51.31 per cent in 2024, before decelerating significantly in 2025.

Despite the slowdown in growth, the total stock of money in the economy remained elevated. Broad money supply (M3) rose to an all-time high of N122.9 trillion in November 2025, up from N108.97 trillion in the same period of 2024. 

On a month-on-month basis, M3 increased by N3.9 trillion, or 3.3 per cent, from N119.03 trillion in October, indicating continued liquidity build-up toward the end of the year, albeit at a reduced pace.

Analysts say the moderation reflects the impact of sustained monetary tightening by the CBN. 

Head of Research at Parthian Securities, Adebowale Funmi said slower money supply growth is positive for inflation control, as it reduces excess demand pressures and supports the ongoing moderation in prices.

Nigeria’s headline inflation rate continued its downward trend in November 2025, easing to 14.45 per cent from 16.05 per cent in October, underscoring the effects of tighter monetary conditions. 

The CBN mopped up about N33.12 trillion from the financial system in 2025 through Open Market Operations (OMO) and other liquidity management tools.

Head of Financial Institutions Ratings at Agusto & Co., Ayokunle Olubunmi said the sharp slowdown in money supply growth reflects the CBN’s contractionary stance throughout most of 2025. 

He noted that the apex bank maintained aggressive tightening measures, including raising the Cash Reserve Ratio (CRR) to 50 per cent at some point, keeping the Monetary Policy Rate (MPR) elevated, and conducting frequent OMOs to absorb excess liquidity.

According to Olubunmi, the measures also designed to stabilise the foreign exchange market have significantly constrained liquidity in the financial system. 

He added that moderation in money supply should translate into further easing of inflationary pressures and support a gradual return to sustainable economic growth driven by real sector activity rather than speculative flows.

Funmi also attributed the slowdown to high interest rates, stricter cash reserve management, reduced direct financing of fiscal deficits through ways and means advances, and elevated borrowing costs that have moderated credit expansion.

In November 2025, the Monetary Policy Committee (MPC) voted to maintain its tight monetary stance, retaining the MPR at 27.0 per cent while adjusting the standing facility corridor to +50/–450 basis points around the policy rate. 

The Committee also kept the CRR at 45.0 per cent for Deposit Money Banks, 16.0 per cent for Merchant Banks, and 75.0 per cent for non-TSA public sector deposits, while maintaining the Liquidity Ratio at 30.0 per cent.

The decision, the CBN said, reflects its commitment to sustaining price and financial stability amid ongoing efforts to rein in inflation and manage liquidity conditions in the economy.