THE Central Bank of Nigeria (CBN) has cut its benchmark interest rate by 350 basis points to 23 percent, marking a significant easing of monetary policy as inflationary pressures moderate.
CBN Governor, Mr Olayemi Cardoso, announced the decision on Tuesday after the Monetary Policy Committee (MPC)’s 307th meeting in Abuja.
The cut takes the Monetary Policy Rate (MPR), which is the benchmark interest rate, from 26.5 percent to 23 percent, its first reduction since the MPC cut the rate by 50 basis points in February 2026.
The MPC had kept the benchmark rate unchanged at its two subsequent meetings as it assessed the pace of disinflation and other risks to the economy.
Cardoso said the committee reviewed developments in the global and domestic economies, emerging risks and their implications for monetary policy before deciding to reset the MPR at 23 percent.
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The committee also adjusted the standing facility corridor to +50 and -300 basis points around the MPR.
It, however, retained the Cash Reserve Ratio at 45 percent for deposit money banks, 16 percent for merchant banks and 75 percent for non-TSA public sector deposits.
According to Cardoso, the adjustment to the policy rate and corridor is intended to strengthen monetary policy transmission and restore the MPR as the principal signal of the CBN’s policy direction.
He said the recalibration should not be interpreted solely as a shift in the underlying monetary policy stance but as part of the ongoing reform of the framework for implementing monetary policy.
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“The MPC emphasised that the duration of the corridor does not constitute a change in the current monetary policy stance, but rather an operational reset to enhance the effectiveness of monetary policy and support the transition to an inflation targeting framework,” Cardoso said.
The governor said MPC members considered the prevailing macroeconomic environment supportive of the adjustment without jeopardising the disinflation process.
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The committee also noted progress in the CBN’s efforts to improve its monetary policy implementation framework, particularly through transaction-based operational benchmarks aimed at making money market operations more transparent.
Cardoso said the new configuration would better align the monetary policy framework with prevailing market conditions and improve the transmission of policy decisions to financial markets and the broader economy.
The rate cut comes at a time when Nigeria’s inflation rate has continued to moderate, providing the CBN with greater room to shift its focus towards supporting economic activity while maintaining price stability.
The lower MPR is expected to have implications for money market rates, fixed-income yields, borrowing costs and liquidity conditions, although the extent and speed of transmission will depend on banks’ funding costs, liquidity and broader market conditions.
The decision also places greater importance on the CBN’s communication and liquidity management operations as it seeks to make the MPR a more effective benchmark for financial-market pricing.
