Year-on-year, M3 (broad money supply) expanded by N11.04tn or 10.22 per cent from N107.99tn in October 2024, reflecting a continued build-up of liquidity in the financial system despite a tight monetary environment.

The rise in October 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. The cut came as inflation began to moderate and foreign exchange conditions improved.

Broad money supply, which includes narrow money, quasi-money, and other liquid assets, strengthened in the month that followed, indicating a higher availability of cash and near-cash balances, even as the CBN cautiously eased without fuelling renewed inflationary pressure.

A significant driver of the increase was a jump in net domestic assets. NDA rose to N84.23tn in October from N76.12tn in September, a difference of N8.11tn or 10.65 per cent within one month. The rise reflects a surge in domestic credit conditions, including higher government borrowing and increased banking system claims on the private sector.

This sharp expansion outweighed a notable drop in net foreign assets, which declined from N41.66tn in September to N34.80tn in October. The fall of N6.86tn represents a 16.45 per cent month-on-month contraction, and highlights renewed external pressures, despite NFA still standing N14.01tn higher than the same period in 2024.

Money supply measured as M2 also grew modestly from N117.77tn in September to N119.03tn in October, an increase of N1.25tn or 1.06 per cent.

Compared with October 2024, M2 rose by N11.04tn or 10.22 per cent. M2 includes narrow money and quasi-money, such as savings and term deposits, and reflects the financial balances most commonly used for day-to-day transactions and short-term decisions.

Narrow money, or M1, showed a smaller change, growing from N39.11tn in September to N39.35tn in October, an increase of N239bn or 0.61 per cent. Year-on-year, M1 rose by N4.56tn or 13.12 per cent.

The October figures show that the major push to liquidity came from the domestic side of the economy rather than from foreign inflows, with NDA rising sharply at a time when foreign assets were weakening.

The CBN’s decision in November 2025 to hold the MPR at 27 per cent underscored concerns about managing liquidity while protecting the disinflation gains achieved so far.

CBN Governor, Olayemi Cardoso, announced the decision on Tuesday in Abuja at the end of the committee’s 303rd meeting, where all twelve members were present. Cardoso said the MPC voted by a majority “to maintain the monetary policy stance,” adding that members were convinced that the economy required more time for earlier decisions to filter through.

The committee also adjusted the corridor around the benchmark rate to +50/-450 basis points and retained 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.

The liquidity ratio was kept unchanged at 30 per cent. According to the communiqué, the stance was underpinned by the need “to sustain the progress made so far towards achieving low and stable inflation,” adding that future policy choices would remain “evidence-based and data-driven.”

The bank attributed the decline to sustained monetary tightening, improved FX market stability, higher capital inflows, and relative calm in fuel prices.

At the press briefing, Cardoso argued that price stability was only the first step. “The issue of macro stability and the gains of macro stability, to my mind, is the core of the matter,” he said. “To the extent that we have accomplished stability, stability is a very fundamental process in the road to growth,” he added.