The Central Bank of Nigeria (CBN) has reduced the Monetary Policy Rate (MPR) by 50 basis points to 26.50 per cent from 27.00 per cent, signaling a cautious shift in its monetary stance.
The decision was announced on Tuesday at the end of the 304th Monetary Policy Committee (MPC) meeting in Abuja.
CBN Governor, Olayemi Cardoso, said the resolution was unanimous.
“The Committee decided to reduce the Monetary Policy Rate by 50 basis points to 26.50 per cent,” Cardoso stated.
He disclosed that the liquidity ratio was retained at 30 per cent, while the standing facilities corridor was adjusted to +50 and -450 basis points around the MPR.
The MPC also maintained the Cash Reserve Ratio (CRR) at 45 per cent for commercial banks and 16 per cent for merchant banks. The 75 per cent CRR on non-TSA public sector deposits was equally retained.
Inflation outlook drives decision
Cardoso said the committee’s decision was anchored on a balanced assessment of risks, with members expressing confidence that the disinflation trend would be sustained.
According to him, headline inflation declined year-on-year in January 2026, marking the 11th consecutive month of deceleration.
He attributed the trend to the lagged impact of previous monetary tightening, sustained exchange rate stability, strong capital inflows, and improvements in food supply, particularly staples. Relative stability in petroleum product prices also supported the moderation in inflationary pressures.
“These outcomes indicate that prior tightening has continued to anchor inflation expectations,” he said.
External sector stability
The CBN governor noted significant improvements in Nigeria’s external sector performance, driven by higher export earnings and increased remittance inflows.
He said the gains have strengthened the balance of payments, enhanced foreign exchange market stability, and boosted investor confidence.
The MPC also welcomed the newly issued Presidential Executive Order 09, which redirects oil and gas revenues into the federation account, describing it as a positive step toward strengthening fiscal revenues.
The MPR serves as the benchmark interest rate used by the CBN to manage inflation, liquidity, and overall macroeconomic stability.
The rate was last held at 27.00 per cent in November 2025.
