CBN Lowers Benchmark Interest Rate to 26.5% Amid Improved Macroeconomic Outlook
The Central Bank of Nigeria (CBN) yesterday reduced the Monetary Policy Rate (MPR) by 50 basis points, lowering it from 27% to 26.5%, the Governor, Olayemi Cardoso, announced at the conclusion of the 304th Monetary Policy Committee (MPC) meeting in Abuja.The CBN also retained the standing facilities corridor at +50 to -450 basis points and kept the Cash Reserve Requirement (CRR) unchanged for deposit money banks (45%), merchant banks (16%), and non-TSA public sector deposits (75%).
Cardoso explained that the decision reflects a balanced assessment of risks, noting that Nigeria’s disinflation trajectoryis expected to continue due to prior monetary tightening, sustained exchange rate stability, and improved food supply. January 2026 marked the 11th consecutive month of year-on-year headline inflation decline, driven by contractionary monetary policy, robust capital inflows, improved balance of payments, and relative stability in petroleum and staple food prices.The Governor highlighted strong performance in the external sector, including rising foreign exchange reserves, higher export earnings, and increased remittances, which have bolstered investor confidence. He also welcomed Presidential Executive Order 09 redirecting oil and gas revenues into the Federation account, which is expected to improve fiscal revenue and reserve accumulation.
Cardoso noted that the banking sector remains resilient, with most key financial soundness indicators within regulatory thresholds. Of the 33 banks that raised additional capital during the ongoing recapitalization program, 20 have met the new minimum capital requirements, mobilizing ₦4.05 trillion—71% from domestic sources and 28.33% from foreign investors. He assured depositors of banks under regulatory intervention that their funds are safe.
Nigeria’s gross external reserves reached $50.4 billion as of February 19, 2026—the highest in 13 years—capable of financing imports for more than nine months.While optimistic about continued inflation reduction and macroeconomic stability, Cardoso cautioned that election-related spending could pose risks, urging fiscal authorities to ensure sustainability through prudent management.This measured easing of the MPR reflects CBN’s confidence in the strengthening of Nigeria’s macroeconomic fundamentals while remaining vigilant about potential fiscal pressures ahead.
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