CBN Cuts Interest Rate; Confidence In Economy Growing

The Central Bank of Nigeria, CBN, has slashed the  Monetary Policy Rate, MPR also known as the benchmark interest rate by 50 basis points to 26.50 percent from 27 percent. It’s the first time the apex bank has cut the rate in five months.

The last time the Yemi Cardoso-led CBN cut the rate was in September 2025 from 27.5 percent to 27 percent.

Speaking at the ongoing  Monetary Policy Committee, MPC,  meeting in Abuja, the nation’s capital, Cardoso said all the members of the Committee agreed that the Rate should be slashed downward, saying the decision was also based on the fact that inflation is slowing down in the country.

Cardoso stressed that inflation in the country has been on the downward slope for 11 months consecutively, driven by the bank’s tight monetary policy, stability in the foreign exchange market, robust capital inflows and improvements in the balance of payments.

The CBN Governor also announced other decision taken by the MPC, including the liquidity ratio which was maintained at 30 percent, the Cash Reserve Ratio (CRR) at 45 percent for commercial banks and 16 percent for merchant banks.

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

“In reaching this policy decision, the committee took into account, the sustained deceleration in year-on-year headline inflation in January 2026, marking the 11th consecutive month of decline.

“This downward trajectory in inflation was driven mainly by the continued effect of the contractionary monetary policy, stability in the foreign exchange market, robust capital inflows and improvements 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.”

Meanwhile, the federal government , on Tuesday said  it welcomed the CBN’s decision to cut the Monetary Policy Rate by 50 basis points to 26.5 per cent, saying it’s a signal that the confidence in the nation’s economy is growing.

According to a statement signed by the Minister of Finance and Coordinating Minister of the Economy, Wale Edun the economy has now transited from  “stabilisation to economic consolidation” saying interest cut  has provided the government with the fiscal space to accelerate investment in infrastructure, energy, agriculture and social services.

“For businesses, it improves access to credit, supports private sector investment, and strengthens job creation in the real economy,” Edun said.