The Central Bank of Nigeria (CBN) has reduced the Monetary Policy Rate (MPR) by 50 basis points to 26.5 per cent from 27 per cent.
The decision was taken at the 304th meeting of the Monetary Policy Committee (MPC) held in Abuja on Tuesday.
The outcome was announced by the CBN Governor, Mr. Olayemi Cardoso, with 11 members in attendance.
The MPR serves as the benchmark interest rate and is a key monetary policy tool used by the apex bank to control inflation, manage liquidity, and maintain macroeconomic stability.
What they are saying
The MPC said the decision to cut the benchmark rate was driven by sustained improvements in key macroeconomic indicators, particularly inflation.
Headline inflation declined for the eleventh consecutive month to 15.1 per cent in January 2026, reflecting continued price moderation.
- The Monetary Policy Rate was reduced by 50 basis points to 26.5 per cent.
- The Cash Reserve Ratio was retained at 45.0 per cent for commercial banks and 16.0 per cent for merchant banks.
- The Liquidity Ratio was maintained at 30.0 per cent.
- The Standing Facilities Corridor was fixed at +50/-450 basis points around the MPR.
The committee noted that although inflationary pressures are easing, maintaining other policy parameters reflects a cautious stance aimed at safeguarding financial system stability.
This rate cut represents the lowest benchmark rate since May 2024, when the interest rate stood at 26.25 per cent.
Expert views
Market analysts had expressed mixed expectations ahead of the MPC meeting, with opinions divided between a rate cut and a hold decision. Some analysts argued that improving macroeconomic conditions created room for easing, while others urged caution.
- “I will say that recent macroeconomic developments have strengthened the case for a potential policy rate cut at the upcoming MPC meeting,” said Asimiyu Damilare, Head of Research at Afrinvest West Africa.
- The Managing Director and Chief Executive Officer of Arthur Steven Asset Management Limited said, “I think on the back of the above, as well as the fact that it is a bit early in the year to gather appropriate data, it might be a bit early for us to see a significant move by the MPC.”
The differing views reflected uncertainty over the pace at which the CBN would begin loosening its previously tight monetary stance.
What you should know
At its 303rd meeting, MPC retained the Monetary Policy Rate (MPR) at 27 per cent.
The latest decision marks the first rate cut after a prolonged period of aggressive tightening aimed at curbing inflation and stabilising the naira.
However, the retention of other key policy parameters suggests that the CBN is adopting a gradual approach to monetary easing.
- Inflation has declined for eleven consecutive months, reaching 15.1 per cent in January 2026.
- The MPC continues to signal vigilance despite easing the benchmark rate.
With inflation trending downward and liquidity conditions relatively stable, the committee’s decision indicates a measured shift toward monetary easing while preserving policy safeguards to sustain macroeconomic stability.
