The Central Bank of Nigeria (CBN) reduced the Monetary Policy Rate (MPR) by 50 basis points to 26.5% during its 304th Monetary Policy Committee (MPC) meeting on February 24, 2026.
Other key settings, including the Cash Reserve Requirement for deposit money banks at 45%, and the standing facilities corridor, were left unchanged.
CBN Governor Olayemi Cardoso said the rate cut was not a signal that inflation risks had ended, emphasizing caution.
Analysts attribute the decision to sustained disinflation, exchange rate stability, and improving food supply.
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Nigeria’s headline inflation in January 2026 fell slightly to 15.10% from 15.15% in December 2025, the lowest in over five years.
Food inflation dropped to 8.89%, marking the first single-digit reading in more than a decade.
Core inflation eased to 17.72%, driven by moderation in Information and Communication services.
Governor Cardoso highlighted that the decline was supported by earlier contractionary monetary policy, foreign exchange stability, robust capital inflows, and an improved balance of payments.
However, he warned that fiscal releases, especially election-related spending, could reignite inflationary pressures.
On the external front, gross reserves rose to $50.45 billion, providing nearly 10 months of import cover.
The CBN welcomed the recently issued Presidential Executive Order 09, which channels oil and gas revenues into the Federation Account, potentially improving fiscal planning and reserve strength.
The banking sector has also strengthened, with 20 banks meeting new minimum capital requirements and 13 others in advanced stages of recapitalisation.
Domestic mobilisation accounted for 71.6% of the capital raised, with the remaining 28.3% from foreign participation.
Experts said the rate cut provides fiscal space for government investment in infrastructure, energy, and agriculture, while also supporting private sector credit and job creation.
However, challenges like weak policy transmission, structural constraints, and fiscal vulnerabilities may limit the immediate impact on borrowing costs.
Governor Cardoso reaffirmed the CBN’s commitment to price stability, financial system resilience, and evidence-based monetary policy, while urging careful monitoring of fiscal activities and external risks.
