Central Bank of Nigeria Delivers Measured 50 bps Rate Cut to 26.5% as Inflation Hits 11- Year Low
February 24, 2026 In a significant move signalling cautious monetary recalibration, the Central Bank of Nigeria (CBN) has reduced its benchmark Monetary Policy Rate (MPR) by 50 basis points to 26.5 per cent at the conclusion of the 304th Monetary Policy Committee (MPC) meeting held in Abuja.
The decision marks the first policy rate adjustment so far in 2026 and reflects the apex bank’s confidence in moderating inflation dynamics while weighing the need to sustain foreign investor confidence.
Balancing Price Stability with Growth Support
The CBN Governor, Olayemi Cardoso, announced the rate cut after a two-day MPC session and emphasised that the decision was based on a “balanced evaluation of risks” to the macroeconomic outlook. Officials highlighted that ongoing disinflation, relative stability in the foreign exchange market, and improved food supply conditions have created room for this cautious easing.
While the MPR was lowered, other key policy levers remain unchanged:
- Cash Reserve Ratio (CRR) retained at 45 per cent for commercial banks and 16 per cent for merchant banks.
- Liquidity Ratio maintained at 30 per cent.
- Standing facilities corridor held at +50/-450 basis points around the MPR.
This measured approach reflects the CBN’s focus on preserving financial system resilience even as inflation shows sustained deceleration.
Inflation at an 11-Year Low and Disinflation Momentum
A central justification for the rate move has been continued disinflation. According to data from the National Bureau of Statistics (NBS), headline inflation eased to 15.10 per cent in January 2026, marking the eleventh consecutive month of decline. This represents the lowest inflation level in over a decade, underscoring progress in curbing price pressures nationwide.
Other inflation sub-indices also show moderation:
- Food inflation fell significantly, reflecting improved domestic supply conditions.
- Core inflation tracked lower compared with previous months.
Experts attribute this trend partly to the cumulative impact of previous monetary tightening, exchange rate stability and structural improvements in agricultural production.
External Sector Strength and Investor Sentiment
The CBN’s decision coincides with strengthening external buffers. Gross external reserves have risen to about $50.45 billion, the highest in 13 years, offering substantial import cover and bolstering confidence in the foreign exchange market.
Observers say sustained reserve accretion and FX stability have helped support foreign investor confidence, which had been fragile amid earlier monetary tightening and exchange rate volatility. Most analysts view the cautious rate reduction as a positive signal to both domestic and international investors that Nigeria’s macroeconomic fundamentals are improving.
The Centre for the Promotion of Private Enterprise (CPPE) welcomed the move as a support to growth and confidence but warned that full benefits hinge on improved fiscal discipline and stronger monetary policy transmission to the real economy.
Market and Policy Outlook
Market participants had mixed expectations prior to the MPC meeting, with some analysts expecting a rate hold and others forecasting modest easing in light of falling inflation and stabilisation trends. The 50- basis- point cut to 26.5 per cent suggests a measured approach to easing rather than a dramatic shift.
Beyond monetary policy, experts caution that fiscal coordination and structural reforms will be essential to translate lower rates into broader economic growth, especially in credit markets where high lending rates and structural rigidities can blunt policy impact.
CBN has scheduled its next MPC meeting for later in May 2026, where further adjustment to the monetary stance may be considered depending on incoming inflation, growth and external sector data.
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