The Central Bank of Nigeria has reduced its benchmark interest rate by 350 basis points, bringing the Monetary Policy Rate down from 26.5 per cent to 23 per cent.
The decision was announced by the CBN governor, Olayemi Cardoso, on Tuesday at the conclusion of the 307th meeting of the Monetary Policy Committee in Abuja.
The latest reduction represents the largest single cut in the history of the MPR and marks a significant shift following an extended period of tight monetary policy.
The move comes amid a continued moderation in inflation, with headline inflation falling for the third consecutive month to 15.39 per cent in August from 15.43 per cent in July.
For businesses and borrowers that have faced elevated interest rates during the tightening cycle, the reduction could eventually ease borrowing costs if banks transmit the lower policy rate to their customers.
Here are eight key points from the latest MPC decisions.
1. The MPR recorded its biggest single reduction
The MPC cut the benchmark rate by 350 basis points, moving it from 26.5 per cent to 23 per cent in the largest one-time reduction recorded since the introduction of the policy rate.
2. The decision ends two consecutive rate holds
The committee had retained the MPR at 26.5 per cent at its May and July meetings in 2026, choosing to maintain the existing stance before announcing the latest reduction.
3. It follows a smaller cut in February
At its February 2026 meeting, the MPC reduced the MPR by 50 basis points from 27 per cent to 26.5 per cent, making the latest decision the second rate cut of the year.
4. The MPR has returned to its February 2024 level
The new 23 per cent rate takes the benchmark back to the level recorded in February 2024, before subsequent increases pushed monetary policy into a tighter phase.
5. The rate is now 4.5 percentage points below its previous peak
At 23 per cent, the MPR is 4.5 percentage points lower than the 27.5 per cent peak reached during the preceding tightening cycle.
6. Easing inflation provided room for the cut
The MPC’s decision comes as headline inflation has declined for three consecutive months, with the August figure of 15.39 per cent providing further evidence of a moderating inflation trend.
7. The Standing Facilities Corridor was also changed
Alongside the MPR reduction, the committee adjusted the Standing Facilities Corridor to +50/-300 basis points around the new benchmark rate, affecting the rates applicable to banks’ borrowing from and lending to the CBN.
8. Cash reserve requirements remain unchanged
Despite the reduction in the policy rate, the MPC retained the Cash Reserve Ratio at 45 per cent for deposit money banks, 16 per cent for merchant banks and 75 per cent for non-TSA public sector deposits.
The unchanged CRR means banks will continue to maintain the same proportion of specified deposits as reserves even as the CBN lowers its benchmark interest rate.
