Imagine the economy is like a big market, and the MPR (Monetary Policy Rate) is the price of borrowing money set by the Central Bank.

When the Central Bank cuts rates, it means:

“Banks, businesses, and people can borrow money more cheaply.”

This can affect the NGX (stock market), the economy, and prices in different ways.

1. Effect on NGX (Stock Market)

When interest rates fall:

Bank deposits and Treasury Bills may offer lower returns.
Some investors move money from savings and money market funds into stocks.
More money enters the stock market.

Example:

Before:

Treasury Bill = 22%
Stocks = Risky

After rate cut:

Treasury Bill = 16%

Some investors say:

“Let me buy MTN, Seplat, Access, or NIDF for better returns.”

This can help push stock prices up.

2. Effect on Businesses

Businesses can borrow at lower costs.

Example:

Before:

Company borrows at 25%

After:

Company borrows at 20%

Cheaper loans can help companies:

Expand operations
Buy equipment
Employ more workers

If companies perform better, their profits may improve, which can support their share prices.

3. Effect on the Economy

Lower rates can encourage:
More spending
More investing
More business activities
More jobs

Think of it as:

Rate cut = More money flowing around the economy.

4. Effect on Price Stability (Inflation)

This is where the Central Bank must be careful.

If too much money enters the economy:

More people buy goods
Demand increases
Prices may rise

Example:

If many people suddenly have money to buy rice, cars, or houses:

More buyers + Limited goods = Higher prices (inflation)

That is why the CBN tries to balance:

Economic growth
Stable prices

Yes,
but the ₦113.54 offer price does NOT automatically mean NIDF’s market price will fall to ₦113.54.

Here’s the simplest way to understand it.

Think of NIDF like a shop

There are two different prices:

₦147.70 = the price people were paying for NIDF units on the NGX.
₦113.54 = the special price at which NIDF is offering new units in this Series 12 offer.

NIDF itself says the ₦113.54 offer price is 23.13% below the ₦147.70 NGX closing price on September 22.

So:

₦113.54 is an offer/subscription price, not a prediction that NIDF will trade at ₦113.54.

So why would they sell at ₦113.54 when the market price is ₦147.70?

Because NIDF wants to raise up to ₦45 billion by issuing about 396.33 million new units.

It’s basically saying:

“We are raising new money. Investors who subscribe to this offer can enter at ₦113.54 per unit.”

The money raised is intended to support additional infrastructure investments.

But here’s the important part

There can be downward pressure on the market price because someone might think:

“Why should I buy NIDF for ₦147 when new investors are getting it for ₦113.54?”

That could make some existing or potential investors willing to sell or wait.

But it does NOT mean the price must fall to ₦113.54.

The actual NGX market price will still depend on buyers and sellers, demand, the fund’s performance, distributions, and how investors value the new units.

Interestingly, the latest market data I found shows NIDF at ₦162.40 on September 28, rather than falling toward ₦113.54.

Let me explain in a simple manner using Pizza analogy

Imagine a company’s ownership is a whole pizza cut into 4 large slices. If you own 1 slice, you own 25% of the pizza. If the company decides to create new share issues (e.g., re-slicing that same pizza into 8 smaller slices) to bring in new investors, but you don’t buy any new slices, you still only own 1 slice.
Now, your 1 slice represents only 12.5% of the whole pizza instead of 25%. This reduction in your percentage of ownership is called ownership dilution.
2. How New Share Issues WorkWhen a business needs capital to fund growth, pay off debt, or make investments, it can issue brand-new stock (shares) and sell them to investors.
Before the issue: Total shares existing = #1,000,000. New shares issued: #250,000.

After the issue: Total shares existing = #1,250,000.

3. Impact of Ownership DilutionWhen new shares are created, existing shareholders experience several changes if they do not purchase additional shares: Reduced Voting Power: Your percentage share of the vote in major company decisions goes down.

Earnings Per Share (EPS) Dilution: Company profits are spread across a larger number of shares, which can temporarily reduce earnings per share. Dividend Share: Any potential per-share dividend payout gets split among more total shares.

Is Dilution Always Bad?

Not necessarily. If the money raised from issuing new shares allows the company to grow significantly, the total company “pie” grows much larger. Owning 10% of a #100 million company (#10 million) is better than owning 20% of a #10 million company (#2 million).

One thing that would have cause the reduction is the latest MPR
Yes. The key thing to understand is that a reduction in the MPR can eventually reduce the returns/yields you see from money market funds, but it does NOT normally take away the money you have already earned or reduce your original capital simply because the MPR was reduced.

As of September 22, 2026, the CBN reset the MPR from 26.5% to 23%. The CBN describes this as an operational realignment because the previous MPR had become disconnected from actual market rates.

Think of it like this:

Suppose you put:

₦100,000 — Money Market Fund

The fund manager invests your money mainly in things such as Treasury bills, fixed deposits and other short-term money-market instruments.

When interest rates are high:

High interest rates – fund can earn more – your fund’s yield can be higher.

When interest rates start falling:

Lower interest rates – new investments may earn less – the fund’s future yield can gradually fall.

That’s why a lower MPR can eventually affect money-market-fund returns.

But here is the important part

Let’s say your:

₦100,000 → ₦112,000

and then the MPR falls.

It does not mean:

₦112,000 → suddenly becomes ₦105,000 because MPR fell.

A falling MPR primarily affects the returns going forward, rather than automatically deleting the interest you’ve already accumulated.

There can be other reasons a fund’s NAV can fluctuate, though, because the fund owns actual securities whose values can change.

Why are people saying money-market returns are reducing?

Because the interest rates on the instruments that money-market funds invest in can also move downward.

For example, imagine:

Before rate reduction

₦100,000 – fund earns around 18% annualized

After rates fall

₦100,000 – fund might eventually earn around 15% annualized

The exact numbers are only an illustration; a fund’s actual return isn’t simply equal to the MPR.

In fact, recent SEC-based data showed different Nigerian money-market funds reporting different yields, demonstrating that MPR ≠(not equal) the exact return of every money-market fund