The Central Bank of Nigeria (CBN) says its decision to reduce the Monetary Policy Rate (MPR) from 26.5% to 23% was driven largely by a disconnect between the official benchmark and prevailing market interest rates.
The apex bank said the 350-basis-point adjustment was an operational reset rather than a conventional shift towards monetary easing. It explained that while the MPR remained at 26.5%, the interbank rate had been around 22%, close to the Standing Deposit Facility (SDF) rate.
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According to the CBN, banks had increasingly used the SDF rate rather than the MPR to price financial transactions, weakening the transmission of monetary policy decisions to the wider economy.
The Monetary Policy Committee (MPC), at its 307th meeting in Abuja, therefore reset the MPR to 23% and recalibrated the Standing Facilities Corridor to +50/-300 basis points around the new benchmark, while retaining existing Cash Reserve Requirement (CRR) levels.
The CBN said the move would restore the MPR as the main policy signal and strengthen monetary-policy transmission as Nigeria transitions towards an inflation-targeting framework.
It cited moderating inflation, stronger economic growth, improved external accounts and rising foreign-exchange reserves as factors supporting the recalibration. Headline inflation fell to 15.39% in August from 15.43% in July, while real GDP growth accelerated to 4.43% in Q2 2026.
The apex bank maintained that monetary conditions remain restrictive despite the lower MPR, noting that the real policy rate stood at 11.11% in August.
