The Central Bank of Nigeria (CBN) on Tuesday reduced the Monetary Policy Rate (MPR) from 27.0 per cent to 26.5 per cent, marking its first interest rate cut of 2026 and signaling a cautious pivot toward monetary easing amid sustained moderation in inflation.
The decision was reached at the 304th meeting of the Monetary Policy Committee (MPC), held at the Bank’s headquarters in Abuja.
Addressing journalists after the meeting, CBN Governor Olayemi Cardoso said the Committee’s decision was informed by improving macroeconomic indicators, particularly the steady decline in headline inflation over recent months. Nigeria’s inflation rate, which had surged to multi‑year highs in 2024 and early 2025, has shown consistent moderation, easing to 15.10 per cent year‑on‑year in January 2026. The downward trend, according to the MPC, reflects the cumulative impact of tight monetary conditions, exchange rate stabilisation measures, and improving supply dynamics.
Cardoso explained that the 50 basis‑point reduction represents a “carefully calibrated adjustment” rather than an aggressive easing cycle, noting that risks to price stability remain. “The Committee remains vigilant to both domestic and external risks that could reverse the gains achieved so far,” he said, stressing that future decisions would remain data‑dependent.
While the benchmark interest rate was reduced, the MPC retained other key monetary tools to maintain a tight liquidity environment. The Cash Reserve Ratio (CRR) for commercial and merchant banks was left unchanged, alongside the Liquidity Ratio (LR). The asymmetric corridor around the MPR was also maintained, reinforcing the apex bank’s cautious approach to liquidity management.
The decision to hold these parameters steady suggests that the CBN is balancing growth concerns with the need to prevent renewed inflationary pressures. The rate cut is expected to gradually reduce borrowing costs for businesses and households, potentially stimulating private sector investment and credit expansion. Analysts say it could also provide modest relief to manufacturers and small businesses grappling with high financing costs.
However, experts caution that transmission to lending rates may take time, given prevailing structural constraints within the banking sector. Financial markets are likely to interpret the move as a signal that the CBN is confident about macroeconomic stability, including improvements in foreign exchange reserves and progress in bank recapitalisation efforts.
For much of 2024 and 2025, the apex bank maintained an aggressive tightening stance to combat inflation and restore investor confidence. The latest decision suggests that policymakers now see room for limited accommodation without undermining hard‑won stability.
Economic observers say the challenge for monetary authorities will be sustaining the delicate balance between stimulating growth and anchoring inflation expectations. “The decision reflects improved confidence in inflation dynamics, but the CBN appears determined not to loosen too quickly,” a Lagos‑based economist noted.
Going forward, market participants will closely monitor inflation data, exchange rate movements, and global commodity prices, all of which remain key determinants of Nigeria’s monetary direction.
The MPC reaffirmed its commitment to safeguarding price stability, strengthening the financial system, and supporting sustainable economic growth. The next policy meeting is expected to further clarify whether the rate cut marks the beginning of a gradual easing cycle or a one‑off adjustment in response to improving data.
By Juliet Ezeh, Abuja
