The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) has reduced the benchmark interest rate by 50 basis points to 26.5%.
CBN Governor, Mr Olayemi Cardoso, announced this shortly after the Committee’s 304th meeting on Tuesday in Abuja.
He announced that the MPC reduced the Monetary Policy Rate (MPR) by 50 basis points from 27% to 26.5%, retained Cash Reserve Ratio (CRR) at 45% for Commercial Banks and retained at 16% for Merchant Banks, retained Liquidity Ratio (LR) at 30%, retained Standing Facilities Corridor at +50 / -450 basis points around the MPR.
The decision, according to him, was premised on a balanced evaluation of risks to the outlook, which suggests that the ongoing disinflation trajectory would continue, largely supported by the lagged 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 eleventh consecutive month of decline. This downward trajectory in inflation was driven mainly by the continued effects of the contractionary monetary policy, stability in the foreign exchange market, robust capital inflows, and improvement 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,” Cardoso explained.
He said the MPC particularly noted the remarkable performance of Nigeria’s external sector, evidenced by the robust accretion to foreign exchange reserves, supported by higher export earnings and increased remittance inflows. This, the Committee said has contributed to greater stability in the foreign exchange market and bolstered investor confidence.
The apex bank governor mentioned that the Committee also welcomed the newly issued Presidential Executive Order 09 which redirects oil and gas revenues into the Federation Account.
“The Committee acknowledged the potential impact of this Order in improving fiscal revenue and accretion to reserves. Given these improved macroeconomic conditions, the Committee believed that a moderate easing was consistent with the prevailing inflation dynamics,” he said.
Cardoso stated that Members acknowledged the continued resilience of the banking sector, with most of the key financial soundness indicators remaining within regulatory thresholds.
He said with regards to the ongoing recapitalization programme, the Committee noted that of the thirty-three (33) banks that have raised additional capital, twenty (20) have met the new minimum capital requirement, reaffirming steady progress towards a more robust and well‑capitalized financial system.
He said the MPC reiterated the strategic importance of the recapitalization exercise and urged the Bank to ensure its successful completion. This, the Committee noted would reinforce financial system resilience and enhance the sector’s capacity to support sustainable economic growth.
In terms of output, Cardoso said the Purchasing Managers’ Index (PMI) stood at 55.7 points in January 2026, reflecting continued expansion in economic activities and likely improvement in output in the fourth quarter of 2025.
He announced that the gross external reserves rose significantly to US$50.45 billion as of February 16, 2026, the highest in thirteen (13) years, and would provide an import cover of 9.68 months for goods and services.
On Global Outlook, he said the Global economic activities are projected to strengthen in 2026, underpinned by progress in trade negotiations, increased investment in Artificial Intelligence-related technology and gradual monetary policy easing.
He said notwithstanding this projection, significant headwinds remain, including rising protectionism, deepening geo-economic fragmentations, and the likely escalation of trade disputes.
Meanwhile on Domestic Outlook, he said the outlook indicates that the current momentum of domestic disinflation will continue in the near term.
This, according to him, was premised on the lagged impact of previous monetary policy tightening, sustained stability in the foreign exchange market and improved food supply.
However, he said increased fiscal releases including election-related spending could pose upside risk to the outlook.
The governor said the MPC reaffirmed its commitment to an evidence-based policy framework, firmly anchored on the Bank’s core mandate of ensuring price stability, while safeguarding the soundness and resilience of the financial system.
