CBN Reduces Interest Rate to 26.5%

“The committee’s decision was premised on a balanced evaluation of risks to the outlook, which suggests that the ongoing disinflation trajectory would continue…” an official said.

The Monetary Policy Committee of the Central Bank of Nigeria (CBN) on Tuesday reduced the benchmark interest rate to 26.5 per cent.

CBN Governor Olayemi Cardoso announced the decision at the conclusion of the bank’s two-day Monetary Policy Committee (MPC) meeting, held from 23 to 24 February in Abuja.

The central bank cut its lending rate by 50 basis points from the 27 per cent it maintained in November 2025.

The CBN boss revealed that the committee’s decision is based on balanced evaluation of risks and sustained exchange rates.

“The committee’s decision was premised on a balanced evaluation of risks to the outlook, which suggests that the ongoing disinflation trajectory would continue, largely supported by the lagged transmission of previous monetary tightening, sustained exchange rate stability, and enhanced food supply.

“This downward trajectory in inflation was driven mainly by the continued effects of the contractionary monetary policy, stability in the foreign exchange, robust capital inflows, and improvement in the balance of payments.

“The momentum was further reinforced by relative stability in the prices of petroleum products and improved food supply conditions, especially staples. These outcomes have indicated that prior tightening has continued to anchor expectations,” Mr Cardoso said.

At the meeting, the MPC adjusted the asymmetric facilities corridor around the MPR at +50/-450 basis points, a move aimed at discouraging banks from keeping idle funds with the CBN and encouraging more lending into the economy.

It also retained the Cash Reserve Ratio (CRR) for commercial banks at 45 per cent and retained merchant banks at 16 per cent. The liquidity ratio was also kept at 30 per cent.

The committee also left the CRR on non TSA public sector deposits for liquidity management considerations at 75 per cent.

Background

In September 2025, the MPC cut its key lending rate for the first time since 2020 by 50 basis points from 27.5 per cent.

The bank maintained its benchmark interest rate at its November 2025 meeting.

Subsequently, Nigeria’s headline inflation rate eased slightly to 15.10 per cent in January from 15.15 per cent in December, supported by reduction in staple food prices, according to National Bureau of Statistics (NBS).

The naira also strengthened by over six per cent in February, following the central bank’s decision to grant bureau de change operators access to the main foreign-exchange market.