The Central Bank of Nigeria has announced a reduction in its benchmark interest rate to 11 percent from 13 percent on Tuesday, its first reduction in the headline cost of borrowing in more than six years.
Governor Godwin Emefiele said members of the bank's monetary policy committee had voted by a margin of eight to two in favour of the reduction.
"We must stimulate growth," Emefiele said, adding that the bank's monetary tightening cycle was over.
The bank's monetary policy committee also decided to cut the cash reserve ratio to 20 percent from 25 percent, Emefiele said.
It also broadened its interest rate corridor to 200 basis points above the benchmark rate and 700 basis points below, which means that it will borrow from commercial lenders at 4 percent and lend to them at 13 percent.
The central bank has been injecting cash into the banking system since October in a bid to ease liquidity and stave off recession in Africa's top oil producer, which has been hit hard by the sharp fall in crude prices over the last year.
Emefiele said some banks seemed to be using the funds to invest in bonds rather than lending to households and businesses which meant September's cut in the cash reserve ratio had not stimulated more lending.
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