CBN launches overnight financing rate to deepen money market transparency

The Central Bank of Nigeria (CBN) has introduced the Nigerian Overnight Financing Rate (NOFR), a new benchmark interest rate designed to enhance transparency, improve price discovery, and strengthen the effectiveness of monetary policy across the financial system.

The apex bank announced the launch in collaboration with the Financial Markets Dealers Association, describing the initiative as a key reform aimed at aligning Nigeria’s short-term interest rate framework with global best practices.

In a statement signed by Hakama Sidi Ali, the CBN said the transaction-based benchmark would serve as a credible reference rate for secured overnight lending in the interbank market.

The Nigerian Overnight Financing Rate (NOFR) reflects the interest rate for secured overnight funds traded among banks. As a transaction-based benchmark, it is expected to provide a more transparent and reliable measure of short-term funding costs in the money market.

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The bank noted that the new rate would foster consistent pricing of money market instruments and improve the overall functioning of Nigeria’s financial markets.

With the adoption of NOFR, Nigeria joins major global economies that have transitioned to transparent, transaction-based overnight benchmarks.

Regionally, the move complements benchmarks such as the Johannesburg Interbank Average Rate (JIBAR) in South Africa, reinforcing Nigeria’s integration into global financial markets.

The CBN said the development of NOFR followed a structured stakeholder engagement process within Nigeria’s financial system. The benchmark was formally adopted after a stakeholders’ meeting held on February 27, 2026, with regulatory approvals secured ahead of its official launch.

As benchmark administrator, the CBN will oversee governance, ensure transparency, and publish the rate regularly.

The introduction of NOFR comes amid recent movements in short-term interest rates. Data from the money market show that: The overnight lending rate rose by 4 basis points to 22.9%; The overnight Nigerian Interbank Offered Rate (NIBOR) climbed 7 basis points to 22.84%; The 3-month NIBOR increased by 8 basis points; The 6-month NIBOR declined by 3 basis points; The 1-month tenor remained unchanged; The Open Repo rate held steady at 22.50%

At the most recent Nigerian Treasury Bills (NTB) auction, the CBN raised N1.91 trillion at lower stop rates, particularly on the 364-day bill, which came in significantly below previous levels.

Market analysts say the introduction of NOFR could further stabilise short-term funding markets by providing a transparent and credible benchmark for overnight lending, thereby strengthening confidence among domestic and foreign investors.