Interest Rate Trimmed As Inflation Eases

CBN Announces Rate Reduction

THE Monetary Policy Committee (MPC) of the Central Bank of Nigeria has reduced the country’s benchmark interest rate to 26.5 per cent.

CBN Governor Olayemi Cardoso announced the decision at the end of the committee’s two-day meeting held from 23 to 24 February in Abuja. The move represents a 50-basis-point cut from the 27 per cent rate maintained in November 2025.

Disinflation and Exchange Rate Stability

Cardoso said the committee’s decision followed a balanced evaluation of risks and recent macroeconomic trends. He noted that inflation has maintained a downward trajectory, supported by the lagged effects of earlier monetary tightening, relative exchange rate stability, improved food supply, and steady petroleum product prices.

According to him, contractionary monetary policies adopted in previous months have helped anchor inflation expectations, while stronger capital inflows and improvements in the balance of payments have bolstered economic stability.

Data from the National Bureau of Statistics show that headline inflation eased slightly to 15.10 per cent in January, down from 15.15 per cent in December, driven largely by lower staple food prices.

Other Key Decisions

Beyond the rate cut, the MPC adjusted the asymmetric corridor around the Monetary Policy Rate (MPR) to +50/-450 basis points. The measure is intended to discourage banks from holding excess idle funds with the CBN and instead promote lending to the real economy.

The committee retained the Cash Reserve Ratio (CRR) for commercial banks at 45 per cent and for merchant banks at 16 per cent, while keeping the liquidity ratio unchanged at 30 per cent. The CRR on non-TSA public sector deposits was also maintained at 75 per cent.

The decision marks the latest step in the CBN’s cautious policy recalibration as inflation moderates and the naira records relative stability.