Central Bank of Nigeria launches new overnight financing rate to enhance financial market transparency
via Punch Nigeria4 min read
The Central Bank of Nigeria CBN has introduced the Nigerian Overnight Financing Rate NOFR, a new transaction-based benchmark interest rate, to improve transparency, monetary policy transmission, and deepen the country's financial markets. CBN Governor Mr. Olayemi Cardoso stated that NOFR aligns Nigeria's financial markets with global best practices by providing a reliable reference rate for market participants. He explained that benchmark interest rates are crucial for pricing financial instruments, managing liquidity, and transmitting monetary policy decisions. The NOFR, developed in collaboration with the Financial Markets Dealers Association and with technical support from the European Bank for Reconstruction and Development, is designed as a transaction-based overnight secured interbank financing rate reflecting the true cost of overnight funding. This approach aims to enhance market integrity, reduce manipulation risks, and improve price discovery. Cardoso expressed confidence that the successful implementation of NOFR will strengthen domestic and foreign investor confidence and contribute to sustainable economic growth. Deputy Governor, Economic Policy Directorate, Philip Ikeazor, described the launch as a major milestone, signifying progress and modernization in Nigeria's financial infrastructure. David Enilolobo, Group Head of Treasury at Access Bank Plc, emphasized that transaction-based benchmarks offer stronger market credibility, which is essential for attracting
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