Cardoso Explains Interest Rate Cut Amid Skeptism

The Central Bank of Nigeria, CBN, has reduced the Monteary Policy Rate,MPR to 23 percent from 26.5 percent. The MPR  is the benchmark interest rate in the country, which commercial banks use to set their own interest rate for  loans.

Yemi Cardoso made the disclosure on Tuesday following a meeting by the Monetary Policy Committee, MPR, its 307th in Abuja, the nation’s capital. The commitee had earier in August set the MPR at 26.5 percent from 27 percent.

Speaking yesterday,Cardoso stated that the reduction is in conformation with the current economic relites in the country, saying the inflationary trajectory has slighly subsided.

According tohim, the Commitee also considered the trends in the domestic and global economy before taking the decision to ”reset the monetary policy rate at 23 per cent is aimed at strengthening monetary policy transmission and enforcing the primacy of the rate.

The latest reduction comes after the MPC kept the rate unchanged at its two preceding meetings, following a 50-basis-point cut in February 2026.

Cardoso stated that the committee also agreed to recalibrated the standing facility corridor to +50 and -300 basis points around the MPR, while retaining the Cash Reserve Requirement, CRR, at 45 per cent for deposit money banks, 16 per cent for merchant banks, and 75 per cent for non-TSA public sector deposits, adding that the operational reset will enhance the effectiveness of monetary policy and support the transition to an inflation targeting framework, noting that the decision will not contradict its ongoing efforsts to tackle inflation in the country.

“The MPC emphasized 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.

“Members are of the view that the macroeconomic environment remains supportive of such a recalibration without undermining the disinflation process,” Cardoso said.

Reacting, Ayodele Akinwumi, Chief Economic, United Capital Plc said the CBN decision to lower the rate was unexpected, saying he was ”plesantly surprised” at what he also described as a ”bold decision” by the apex bank.

Though unexpected, Akinwumi stressed that the commitee may have taken the decision to lower the MPR, by considering other economic factors, which are not visible  to other stakeholders in the sector.

He noted that the trajectory of the economy, in the next few days, will determine whether the CBN has taken the right decision to reduce the rate.