Nigeria’s Central Bank has reduced its benchmark interest rate for the second time in less than a year, a move described by business groups as a cautious but positive signal for the economy.
The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) cut the Monetary Policy Rate (MPR) by 50 basis points to 26.5 per cent at its 304th meeting in Abuja. All 11 committee members attended. Governor Olayemi Cardoso confirmed the decision, stating it followed a “balanced evaluation of risks” that indicated the ongoing disinflation trajectory would continue, supported by previous monetary tightening, exchange rate stability, and improved food supply.
Headline inflation decelerated to 15.10 per cent in January 2026 from 15.15 per cent in December, marking the eleventh consecutive monthly decline. Month-on-month headline inflation fell to -2.88 per cent, signalling continued softening price pressures. Food inflation dropped significantly to 8.89 per cent, while core inflation reduced to 17.72 per cent.
Alongside the rate cut, the MPC retained the Cash Reserve Requirement (CRR) for deposit money banks at 45 per cent and maintained the Standing Facilities Corridor. Governor Cardoso also highlighted the potential fiscal benefits of the new Presidential Executive Order 09, which redirects oil and gas revenues into the Federation Account.
The Organised Private Sector (OPS) welcomed the modest easing but stressed that its impact would be limited without complementary reforms. Adewale Oyerinde of the Nigeria Employersā€™ Consultative Association noted the cut reflects “a gradual shift toward supporting economic growth,” but warned that the high CRR continues to constrain credit expansion to the real sector.
Dr Muda Yusuf of the Centre for the Promotion of Private Enterprise called the policy “growth-supportive” but cautioned that weak transmission mechanisms and fiscal vulnerabilities could blunt its effectiveness. Segun Kuti-George of the National Association of Small-Scale Industrialists viewed it as an adjustment to preserve monetary gains, while the Lagos Chamber of Commerce and Industry described it as a “cautious, positive step” signalling a shift toward stabilisation.
The next MPC meeting is scheduled for May 19-20, 2026. Business leaders emphasised that for the rate cut to translate into tangible relief for manufacturers and SMEs, it must be paired with structural reforms addressing infrastructure, supply chains, and fiscal consolidation.
