Nigeria’s Monetary Policy Committee (MPC) has reduced the benchmark interest rate to 26.5 percent, marking a modest but significant shift in monetary policy.
The decision was announced by Olayemi Cardoso, Governor of the Central Bank of Nigeria, following the committee’s 304th meeting in Abuja.
The MPC lowered the Monetary Policy Rate (MPR) by 50 basis points from 27 percent, while retaining key liquidity controls.
The Cash Reserve Requirement remains at 45 percent for Deposit Money Banks, 16 percent for Merchant Banks, and 75 percent for non-TSA public sector deposits.
The Standing Facilities Corridor was also maintained at +50/-450 basis points.
According to Cardoso, the rate cut reflects a balanced assessment of Nigeria’s macroeconomic outlook. Headline inflation eased to 15.10 percent in January 2026, extending an eleven-month disinflation trend.
Food inflation dropped sharply to 8.89 percent, while core inflation declined to 17.72 percent. On a month-on-month basis, inflation fell to -2.88 percent, signaling softening price pressures.
The Organised Private Sector (OPS) described the move as cautious but encouraging. The Nigeria Employers’ Consultative Association said the decision signals responsiveness to business pressures, though tight liquidity conditions may limit immediate credit expansion.
Similarly, the Lagos Chamber of Commerce and Industry noted that while lending rates may remain elevated, the interest rate cut boosts investor confidence and reinforces Nigeria’s transition toward stabilisation and investment-led growth.
Economic analysts stressed that structural reforms, improved infrastructure, and fiscal consolidation are critical to ensure that the benefits of monetary easing translate into lower borrowing costs for manufacturers, SMEs, agriculture, and export-oriented industries.
The next MPC meeting is scheduled for May 19–20, 2026, where stakeholders will watch closely for further signals on Nigeria’s monetary policy direction and economic growth outlook.
