Nigeria’s central bank has reduced its interest rate by 50 basis points to 26.50 percent, marking a cautious shift in monetary policy amid continued easing of inflationary pressures.
The decision was taken at the 304th meeting of the Monetary Policy Committee (MPC) of the Central Bank of Nigeria held in Abuja. Governor Olayemi Cardoso said the committee reached the decision unanimously after reviewing recent economic developments.
Cardoso explained that the adjustment was influenced by sustained moderation in inflation, which has now declined for 11 consecutive months. Headline inflation slowed to 15.10 percent in January 2026, reflecting the combined effects of earlier monetary tightening, improved foreign exchange stability, stronger capital inflows and a more favourable balance of payments position. He added that better food supply conditions, particularly for staple items, as well as relative stability in petroleum product prices, have helped ease price pressures.
While the committee opted to lower the Monetary Policy Rate (MPR), it retained several key monetary parameters. The liquidity ratio remains at 30 percent, while the Cash Reserve Ratio (CRR) was kept at 45 percent for commercial banks and 16 percent for merchant banks. The 75 percent CRR on non-TSA public sector deposits was also maintained. In addition, the standing facilities corridor was adjusted to +50 and –450 basis points around the MPR.
The MPC noted improvements in Nigeria’s external sector, citing higher export earnings and increased remittance inflows as factors that have strengthened foreign exchange stability and boosted investor confidence. The committee also welcomed Presidential Executive Order 09, which redirects oil and gas revenues into the federation account, describing it as a step that could enhance fiscal revenues and support macroeconomic stability.
The rate cut follows the committee’s previous decision to hold the benchmark rate at 27.00 percent in November and signals a measured easing stance as the central bank balances the need to support growth with its commitment to maintaining price stability.
