The Monetary Policy Committee (MPC) of the Central Bank of Nigeria has reduced the benchmark interest rate to 26.5 per cent, marking the second rate cut under the current leadership of the apex bank.
CBN Governor Olayemi Cardoso announced the decision on Tuesday at the end of the committee’s 304th meeting in Abuja. According to him, the committee agreed to lower the Monetary Policy Rate (MPR) by 50 basis points in response to improving economic indicators.
In addition to the rate cut, the MPC resolved to retain the Standing Facilities Corridor at +50/-450 basis points around the MPR. It also maintained the Cash Reserve Requirement at 45 per cent for Deposit Money Banks, 16 per cent for Merchant Banks, and 75 per cent for non-TSA public sector deposits.
This latest adjustment follows a similar 50-basis-point reduction in September 2025, after which the committee held rates steady in November 2025.
Cardoso explained that the decision was based on a balanced assessment of risks and signs that inflationary pressures are gradually easing. Headline inflation slowed to 15.10 per cent in January 2026 from 15.15 per cent in December 2025, marking the eleventh consecutive month of year-on-year decline.
Food inflation dropped significantly to 8.89 per cent from 10.84 per cent, while core inflation eased to 17.72 per cent from 18.63 per cent. On a month-on-month basis, headline inflation fell sharply to -2.88 per cent in January, compared to 0.54 per cent in December, indicating a continued softening of price pressures.
The governor also pointed to improvements in the external sector. Gross external reserves rose to $50.45 billion as of February 16, 2026 — the highest level recorded in 13 years — providing import cover of nearly 10 months for goods and services. The growth in reserves was supported by stronger export earnings and increased remittance inflows, contributing to exchange rate stability and boosting investor confidence.
The MPC welcomed the newly issued Presidential Executive Order 09, which redirects oil and gas revenues into the Federation Account, noting its potential to strengthen fiscal revenue and further support reserve accumulation.
On the banking sector, Cardoso said key financial stability indicators remain within regulatory limits. Out of 33 banks participating in the ongoing recapitalisation programme, 20 have already met the new minimum capital requirements. The committee described this as steady progress toward building a stronger and more resilient financial system.
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Economic activity also showed positive momentum, with the Purchasing Managers’ Index standing at 55.7 points in January 2026 — a signal of continued expansion and likely improvement in output.
Looking ahead, the CBN expects the disinflation trend to continue in the near term, supported by exchange rate stability and improved food supply. However, the governor cautioned that increased fiscal spending, including election-related expenditures, could pose upside risks to inflation.
The MPC reaffirmed its commitment to evidence-based policymaking focused on price stability and financial system resilience. The next MPC meeting is scheduled for May 19 and 20, 2026.
