Nigeria’s money supply rises by N7.51tn to N146.6tn

NIGERIA’S broad money supply rose by N7.51 trillion to N146.6 trillion in September 2026, reflecting a further expansion in liquidity across the financial system following the Central Bank of Nigeria’s decision to cut its benchmark interest rate.

Data published by the Central Bank of Nigeria (CBN) showed that broad money supply, measured as M3, increased by 5.4 percent from N139.09 trillion in August.

The latest increase brought the cumulative growth in money supply since January to N22.65 trillion, representing an 18.3 percent rise from N123.95 trillion recorded at the beginning of the year.

The expansion comes amid a shift towards monetary easing, following the CBN’s decision in September to reduce the Monetary Policy Rate (MPR) by 350 basis points from 26.5 per cent to 23 per cent.

The rate cut, the largest reduction in the benchmark rate since December 2006, was aimed at adjusting monetary conditions as the economy navigates moderating inflationary pressures and the need to support economic activity.

CBN data showed that broad money supply increased from N125.19 trillion in April to N129.54 trillion in May and N133.27 trillion in June. It rose further to about N139.1 trillion in July before remaining almost unchanged at N139.09 trillion in August.

The sharp increase in September marked a fresh acceleration in liquidity growth.

Narrow money supply, which comprises currency in circulation and highly liquid deposits, also increased during the month, rising from N43.11 trillion in August to N44.05 trillion in September.

Currency held outside the banking system rose from N4.87 trillion to N4.92 trillion over the same period.

ALSO READ: NGX sheds N104bn as bearish sentiment persists

Broad money includes cash, demand deposits, savings and time deposits, as well as foreign currency deposits. Its growth reflects an increase in funds held across the financial system, although it does not necessarily translate directly into higher consumer spending or productive investment.

The September expansion followed the CBN’s decision at its 307th Monetary Policy Committee (MPC) meeting to lower the benchmark interest rate by 350 basis points.

The committee also adjusted the interest rate corridor around the MPR to plus 50 basis points and minus 300 basis points, while retaining the Cash Reserve Requirement (CRR) for commercial banks at 45 percent and merchant banks at 16 percent.

The 75 percent CRR on non-Treasury Single Account public-sector deposits was also retained, underscoring the CBN’s continued use of reserve requirements to manage liquidity in the banking system.

At its July meeting, the MPC had retained the MPR at 26.5 percent as it weighed the need to contain inflation against the importance of supporting economic growth.

The latest money supply figures are likely to attract attention from policymakers and financial market operators because of the implications for inflation, credit expansion and exchange rate stability.

An increase in liquidity can support economic activity if funds flow into productive lending, business investment and consumption. However, if money supply expands faster than the economy’s capacity to produce goods and services, it could add to inflationary pressures.

For the CBN, the challenge will be to ensure that expanding liquidity supports productive economic activity without undermining the progress made in stabilising prices and the foreign exchange market.