The Monetary Policy Committee has lowered Nigeria’s benchmark interest rate, the Monetary Policy Rate, from 27 percent to 26.5 percent in a bid to reduce financial strain on businesses and households. The decision was disclosed on Tuesday by the Governor of the Central Bank of Nigeria, Mr. Olayemi Cardoso, at the end of the committee’s 304th meeting.
The 50-basis-point reduction marks the second rate cut within five months, signalling a gradual shift toward looser credit conditions after an extended period of aggressive monetary tightening. By trimming the rate, the apex bank intends to make borrowing slightly more affordable while maintaining overall macroeconomic stability.
According to the committee, the move reflects growing confidence that efforts to curb inflation and reduce the high cost of living are beginning to yield results. Members noted that the impact of earlier restrictive measures is gradually taking hold and that the naira has demonstrated improved stability in the foreign exchange market.
“The Committee’s decision was based on a balanced evaluation of risks to the outlook, which suggests that the ongoing disinflation path will continue,” the CBN governor stated.
Although the headline interest rate was cut, other prudential measures were left unchanged to safeguard the strength of the financial system. The Cash Reserve Requirement, which mandates the proportion of deposits banks must hold with the Central Bank, remains at 45 percent for commercial banks and 16 percent for merchant banks.
The committee also revised the Standing Facility Corridor, the band within which banks can lend to or borrow from the Central Bank. The corridor has now been adjusted to +50 to -450 basis points around the new 26.5 percent benchmark rate.
Cardoso further revealed that 20 banks have successfully met the recapitalisation requirements introduced by the apex bank, commending the resilience and adaptability of the banking industry.
Through these policy adjustments, monetary authorities are seeking a delicate balance—containing inflationary pressures while ensuring that businesses retain access to credit needed for expansion and job creation.
The Central Bank expressed optimism that sustained exchange rate stability and consistent food supply to markets would reinforce the ongoing recovery momentum in the broader economy.
