The Central Bank of Nigeria (CBN) has reduced its key monetary policy rate by 50 basis points to 26.50 percent, marking a modest easing in its tight stance as the country’s monetary policy committee seeks to balance inflation control with economic growth.
The decision, announced by CBN Governor Olayemi Cardoso on Tuesday following the 304th meeting of the Monetary Policy Committee (MPC), was reached unanimously. While the Monetary Policy Rate (MPR) was lowered, the committee maintained several other regulatory ratios. The Cash Reserve Ratio (CRR) for commercial and merchant banks remains unchanged at 45 percent and 16 percent, respectively. The 75 percent CRR on non-Treasury Single Account (TSA) public sector deposits was also held steady. Additionally, the liquidity ratio was retained at 30 percent.
The policy rate adjustment forms part of a broader corridor shift for the CBN’s standing facilities, which was recalibrated to +50/-450 basis points around the new MPR. This framework sets the boundaries for the bank’s overnight lending and deposit rates.
Governor Cardoso explicitly stated the committee’s action: “The committee decided to reduce the monetary policy rate by 50 basis points to 26.50 percent.” This move follows a period of aggressive rate hikes aimed at curbing persistently high inflation. The MPC had held the rate at 27.00 percent since its November 2025 meeting. Prior to that, the last reduction occurred in September of the previous year, when the rate was lowered from 27.50 percent to 27.00 percent.
The slight reduction suggests a tentative shift in the CBN’s approach, potentially reflecting improved inflation readings or a strategic pivot to support economic activity without abandoning its primary price-stability mandate. The decision underscores the MPC’s ongoing assessment of evolving domestic and global economic conditions. For international investors and the domestic business community, the cut signals a gradual, data-dependent relaxation of monetary policy. The immediate impact is expected to marginally lower borrowing costs across the economy, though the overall interest rate environment remains restrictive by historical standards. The CBN’s next move will depend on incoming inflation and growth data throughout the coming quarter.
