The Central Bank of Nigeria (CBN) has reduced its benchmark interest rate from 26.5 per cent to 23 per cent.
CBN Governor, Olayemi Cardoso, announced the decision on Tuesday after the Monetary Policy Committee (MPC) concluded its 307th meeting in Abuja.
The latest decision represents a 350-basis-point reduction in the Monetary Policy Rate (MPR).
CBN Resets Monetary Policy Rate
Cardoso said the MPC reviewed developments in both the global and domestic economies before reaching its decision.
According to him, the committee considered emerging risks to the economic outlook and their possible implications for monetary policy.
“The Committee decided as follows: reset the monetary policy rate at 23 per cent,” Cardoso said.
The latest cut follows two consecutive MPC meetings where the rate was left unchanged. The CBN had previously reduced the rate by 50 basis points in February 2026.
Standing Facility Corridor Adjusted
The MPC also approved changes to the standing facility corridor around the MPR.
The corridor was recalibrated to +50 and -300 basis points around the new 23 per cent policy rate.
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 announcement.
CBN Explains Decision
Cardoso said the adjustments were designed to improve the transmission of monetary policy through the financial system.
He explained that the recalibration should not automatically be interpreted as a fundamental change in the CBN’s monetary policy stance.
Instead, the governor said it was an operational adjustment aimed at strengthening the effectiveness of the policy framework.
“The MPC emphasized that the duration of the corridor does not constitute a change in the current monetary policy stance,” Cardoso said.
He added that the move was intended to support Nigeria’s transition towards an inflation-targeting framework.
Focus on Monetary Policy Transmission
The governor said MPC members considered the current macroeconomic environment suitable for the adjustment.
He also pointed to ongoing efforts by the CBN to improve the implementation of monetary policy.
According to Cardoso, the committee believes that resetting the MPR and adjusting the corridor will better align the policy framework with developments in the financial markets.
The objective, he said, is to strengthen policy transmission and restore the MPR as the principal signal of monetary policy.
What the Rate Cut Means
The reduction brings the CBN’s benchmark rate to 23 per cent and could influence borrowing and lending conditions across the Nigerian financial system.
However, the MPR does not automatically determine the interest rate every bank charges its customers. The effect on loans, savings and other financial products will depend on how commercial banks and financial markets respond.
