KEY POINTS

• The CBN reduced its benchmark interest rate from 27% to 26.5%, signaling a cautious shift toward easier credit conditions.
• Inflation is showing signs of slowing and the naira is stabilising, prompting policymakers to ease rates while keeping safeguards intact.
• Twenty banks have already met recapitalisation requirements, reflecting resilience in Nigeria’s banking sector.

The Central Bank of Nigeria, CBN, has reduced Nigeria’s benchmark interest rate, the Monetary Policy Rate (MPR), from 27% to 26.5%, marking its second rate cut in five months.

The decision was announced after the 304th meeting of the Monetary Policy Committee and reflects a cautious shift from aggressive tightening toward moderate easing.

CBN Governor Olayemi Cardoso said the move is intended to ease financial strain on businesses and households while sustaining economic stability.

By lowering the rate by 50 basis points, the bank aims to make borrowing slightly more affordable without undermining its inflation-control strategy.

Inflation Outlook Improving, Naira Stabilising

The committee explained that its decision followed a balanced assessment of economic risks and encouraging signs that inflation is gradually slowing.

According to the CBN, earlier monetary tightening measures are beginning to produce results, including improved exchange-rate stability and a more predictable market environment.

Cardoso noted that the current trend suggests Nigeria is on a “disinflation path,” meaning price increases are still occurring but at a slower pace. The CBN believes this trajectory will continue if macroeconomic stability is maintained.

Despite the rate cut, the apex bank left several critical safeguards unchanged to preserve financial-sector resilience. The Cash Reserve Requirement (CRR) remains at 45% for commercial banks and 16% for merchant banks, ensuring institutions retain strong liquidity buffers.

The CBN also adjusted the Standing Facility Corridor—the rate range for banks borrowing from or lending to the central bank—to +50 and −450 basis points around the new 26.5% benchmark. This mechanism helps manage short-term liquidity and maintain control over interest-rate volatility.