The Central Bank of Nigeria (CBN) has reduced the Monetary Policy Rate (MPR) by 50 basis points from 27 per cent to 26.5 per cent, marking the second rate cut in five months.
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Central Bank Governor, Olayemi Cardoso, made the disclosure while briefing the media at the end of the 304th Monetary Policy Committee meeting in Abuja on Tuesday.
“The Committee decided to reduce monetary policy rates by 50 basis points to 26.5%,” Cardoso announced.
He said the decision of the Committee was premised on balanced evaluation of risks to the outlook which suggest that disinflation will continue as a result of previous monetary policies and enhanced food supplies.
“The committee’s decision was premised on a balanced evaluation of risks to the outlook, which suggests that the ongoing disinflation trajectory would continue, largely supported by the lagged transmission of previous monetary tightening, sustained exchange rate stability, and enhanced food supply,” Mr Cardoso said.
The CBN governor added that “The committee also took account of sustained deceleration of inflation year on year marking the 11th consecutive decline.”
“This downward trajectory in inflation was driven mainly by the continued effects of the contractionary monetary policy, stability in the foreign exchange, robust capital inflows, and improvement in the balance of payments,” the governor stated.
“The momentum was further reinforced by relative stability in the prices of petroleum products and improved food supply conditions, especially staples. These outcomes have indicated that prior tightening has continued to anchor expectations,” Mr Cardoso said.
“Also, Committee decided to retain the cash reserve requirements for deposit money banks at 45 percent and merchant banks at 16 per cent as well as 75 per cent for non TSA public sector deposit,” Cardoso said.
At the meeting, the MPC adjusted the asymmetric facilities corridor around the MPR at +50/-450 basis points, a move aimed at discouraging banks from keeping idle funds with the CBN and encouraging more lending into the economy.
The liquidity ratio was also kept at 30 per cent.
He also disclosed that 11 members of the Committee were in attendance.
The latest move follows a previous reduction in September 2025 to 27 percent from 27.5 percent, marking a shift after years of aggressive monetary tightening. Before that, the last rate cut occurred in September 2020, when the Monetary Policy Rate was reduced from 12.5 percent to 11.5 percent to cushion the economic impact of the COVID-19 pandemic.
Since 2020, the Central Bank had largely pursued a tightening stance, raising borrowing costs repeatedly in response to persistent inflationary pressures and currency volatility.
Nigeria’s headline inflation rate eased to 15.10 percent in January 2026, down slightly from 15.15 percent in December 2025, according to the latest Consumer Price Index report released by the National Bureau of Statistics. The moderation has strengthened expectations that the CBN may begin a gradual easing cycle after months of aggressive tightening.
The naira also strengthened by over six per cent in February, following the central bank’s decision to grant bureau de change operators access to the main foreign-exchange market.
Analysts at Coronation Merchant Bank said the easing stance could buoy fixed income markets. “If there is a cut, we anticipate continued yield moderation in the fixed income space, making current holdings more valuable for investors,” the firm said in a note.
The rate reduction signals the Monetary Policy Committee’s growing confidence that inflation risks are easing sufficiently to create room for growth-supportive measures, even as authorities continue to stress price stability as a core mandate.
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