The Central Bank of Nigeria (CBN) has reduced the Monetary Policy Rate (MPR) from 26.5 per cent to 23 per cent, cutting the benchmark interest rate by 350 basis points at the Monetary Policy Committee (MPC) meeting held on September 21 and 22, 2026.
CBN Governor, Olayemi Cardoso, announced the decision on Tuesday at the end of the committee’s 307th meeting in Abuja.
The reduction represents the largest single cut in the current monetary policy cycle and brings the MPR to its lowest level since early 2024. The decision comes as inflation continues to moderate and Nigeria records improvements in its external reserves and economic growth.
The MPC also recalibrated the Standing Facilities Corridor to +50 and -300 basis points around the MPR. However, the Cash Reserve Requirement (CRR) was retained at 45 per cent for deposit money banks, 16 per cent for merchant banks and 75 per cent for non-Treasury Single Account public-sector deposits.
According to the CBN, the adjustment is an operational realignment designed to strengthen the transmission of monetary policy and restore the MPR as the principal signal of monetary conditions. Cardoso said the move should not be interpreted as a change from the bank’s restrictive policy stance.
The latest decision follows two consecutive MPC meetings in May and July where the MPR was maintained at 26.5 per cent. The CBN had earlier reduced the rate by 50 basis points in February.
Businesses seek cheaper credit
Following the announcement, business groups called on commercial banks to pass the benefits of the lower benchmark rate to businesses and other borrowers.
The organised private sector said a reduction in the MPR would have limited impact if commercial lending rates remain high.
Business leaders are particularly interested in whether the rate cut will translate into lower borrowing costs for small and medium-sized enterprises, which continue to face challenges accessing affordable credit.
The Lagos Chamber of Commerce and Industry said the reduction should be accompanied by measures that reduce lending risks and improve businesses’ ability to borrow and repay.
The lower benchmark rate could also influence investment decisions, business expansion and consumer borrowing, although the actual effect will depend on how commercial banks adjust their lending rates and other charges.
Inflation continues to moderate
The rate reduction comes against the background of declining inflation.
Nigeria’s headline inflation eased to 15.39 per cent in August 2026, from 15.43 per cent in July. Food inflation also declined to 19.57 per cent, while core inflation fell to 13.29 per cent.
The CBN said improved foreign exchange stability, earlier monetary tightening and better inflation expectations had contributed to the moderation in price pressures.
The country’s economy also recorded 4.43 per cent real GDP growth in the second quarter of 2026, compared with 3.89 per cent in the first quarter.
Nigeria’s gross external reserves stood at $55.25 billion as of September 18, according to figures cited following the MPC meeting.
Despite the positive indicators, the MPC warned of potential risks, including geopolitical tensions and election-related spending that could increase liquidity and create renewed inflationary pressures.
The CBN said it would continue monitoring liquidity, currency in circulation, monetary aggregates and foreign exchange demand.
The next MPC meeting is scheduled for November 23 and 24, 2026, when the committee is expected to review the impact of the latest policy adjustment and other economic developments.
