By Ghazali Ibrahim
The Central Bank of Nigeria (CBN) has reduced its benchmark interest rate the Monetary Policy Rate (MPR) from 27 percent to 26.5 percent, marking the first rate cut of the year.
The decision was announced at the end of the CBN’s 304th Monetary Policy Committee (MPC) meeting held in Abuja on Tuesday.
CBN Governor Olayemi Cardoso confirmed that the MPC voted unanimously to trim the rate by 50 basis points as part of a measured move toward a more accommodative monetary stance. The rate now stands at its lowest level since May 2024.
Despite the cut, the committee kept other key policy tools unchanged.
The Cash Reserve Ratio (CRR) was retained at 45 percent for commercial banks and 16 percent for merchant banks, while the liquidity ratio remained at 30 percent. The standing facilities corridor around the MPR was also maintained.
The move reflects the CBN’s growing confidence that inflation which affect Nigeria’s general rise in prices is moderating.
Recent data show a sustained decline in headline inflation, with figures easing to around 15.10 percent in January 2026. This marks the eleventh consecutive month of disinflation, giving policymakers room to cautiously lower borrowing costs without immediately risking price instability.
By lowering the cost of borrowing, the CBN hopes credit will become more accessible to businesses and households, potentially stimulating investment and economic activity especially in sectors that have struggled under high financing costs.
The cut follows a period of prolonged monetary tightening that sought to rein in inflation and stabilise the naira.
Before Tuesday’s decision, the last rate reduction was recorded in September 2025, when the MPC also trimmed the MPR by 50 basis points.
Markets and economists will be watching upcoming data on inflation, foreign exchange conditions, and credit growth to gauge the impact of the policy shift.
As Nigeria balances price stability with the need to support economic growth, this interest rate adjustment represents a carefully measured step toward easing monetary conditions in a complex economic landscape.
