Nigeria’s monetary landscape continued its expansion in October 2025, with new figures from the Central Bank of Nigeria (CBN) showing that broad money supply (M3) rose to N119.04 trillion, up from N117.78 trillion recorded in September. This represents a month-on-month increase of N1.25 trillion, or 1.06%, and underscores the continued build-up in system liquidity even as the apex bank cautiously navigates a shifting macroeconomic environment.
On a year-on-year basis, the data points to an even more pronounced expansion. M3 climbed from N107.99 trillion in October 2024 to N119.04 trillion in October 2025, marking an annual increase of N11.04 trillion, or 10.22%. This steady growth in liquidity has come at a time when inflation pressures have begun to ease, giving the monetary authorities room to initiate a modest policy rate cut for the first time in five years.
The growth recorded in October follows the Monetary Policy Committee’s (MPC) landmark decision in September 2025 to reduce the Monetary Policy Rate (MPR) by 50 basis points, lowering it from 27.5% to 27%. The cut, taken against the backdrop of moderating inflation and an improving foreign exchange market, signalled a tentative shift toward policy easing after years of aggressive tightening aimed at curbing inflationary pressures.
Net Domestic Assets Take Centre Stage
A closer look at the components of broad money supply reveals that net domestic assets (NDA) were the primary driver of liquidity growth in October. NDA rose sharply from N76.12 trillion in September to N84.23 trillion in October—an expansion of N8.11 trillion, or 10.65%, within a single month. This marks one of the most significant monthly increases recorded in 2025.
NDA reflects the banking sector’s claims on government and the private sector, along with other domestic financial positions. Such a sharp increase typically signals a rise in government borrowing, growth in credit extended to businesses and households or a reallocation of banks’ portfolios toward domestic investments. In October, the strong expansion in NDA more than compensated for a notable contraction in Nigeria’s net foreign assets.
Net Foreign Assets Decline
Net foreign assets (NFA) fell from N41.66 trillion in September to N34.80 trillion in October, a decrease of N6.86 trillion, or 16.45% month on month. Despite this sharp monthly decline, NFA remains significantly higher than it was a year ago, rising by 67.41% when compared with October 2024. The monthly dip, however, highlights renewed external pressures—possibly related to fluctuations in foreign reserves, exchange rate adjustments, or global market dynamics—while domestic liquidity continues to expand.
M2 and Narrow Money Maintain Stable Growth
Money supply measured as M2 mirrored the overall trend, rising from N117.77 trillion in September to N119.03 trillion in October, representing a month-on-month increase of 1.06%. Year on year, M2 also rose from N107.99 trillion to N119.03 trillion, maintaining the same annual growth rate of 10.22% as M3.
The alignment between M2 and M3 suggests that the bulk of the liquidity expansion originated from traditional channels—such as deposits and credit—rather than more complex financial assets.
Narrow money (M1), which captures cash in circulation and demand deposits, saw a more modest adjustment. It increased from N39.11 trillion in September to N39.35 trillion in October, reflecting a rise of 0.61% month on month. Year-on-year growth in M1 stood at 13.12%, indicating steady expansion in cash-based and current account transactions.
A Delicate Balancing Act for the CBN
The combined data paints a picture of an economy experiencing buoyant domestic credit activity while grappling with external vulnerabilities. The strong rise in NDA suggests intensified liquidity creation within the domestic financial system, even as NFA declines.
Given this backdrop, the MPC’s November decision to maintain the MPR at 27% reflects a cautious approach aimed at preventing excessive liquidity from eroding recent progress in taming inflation. By holding rates steady after September’s initial cut, the central bank appears committed to striking a balance between supporting economic recovery and safeguarding macroeconomic stability.
Overall, the October 2025 money supply numbers highlight shifting liquidity dynamics driven largely by domestic financial activity. As Nigeria continues to manage the ripple effects of global uncertainties, exchange rate adjustments and internal credit expansion, the CBN’s measured policy stance remains critical in ensuring that liquidity growth does not reverse the hard-won gains in price stability.
