The Central Bank of Nigeria (CBN) on Tuesday lowered its benchmark interest rate for the second time in five months, trimming the Monetary Policy Rate (MPR) to 26.5 percent, a move aimed at supporting growth amid moderating inflation.

The decision was announced by Olayemi Cardoso, governor of the apex bank, at the end of the two-day Monetary Policy Committee meeting held in Abuja.

Nigeria’s headline inflation rate eased to 15.10 percent in January 2026, down slightly from 15.15 percent in December 2025, according to the latest Consumer Price Index report released by the National Bureau of Statistics. The moderation has strengthened expectations that the CBN may begin a gradual easing cycle after months of aggressive tightening.

The latest move follows a previous reduction in September 2025 to 27 percent from 27.5 percent, marking a shift after years of aggressive monetary tightening. Before that, the last rate cut occurred in September 2020, when the Monetary Policy Rate was reduced from 12.5 percent to 11.5 percent to cushion the economic impact of the COVID-19 pandemic.

Since 2020, the Central Bank had largely pursued a tightening stance, raising borrowing costs repeatedly in response to persistent inflationary pressures and currency volatility.

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Alongside the rate decision, policymakers retained key monetary parameters. The asymmetric corridor was left at +50/-450 basis points around the Monetary Policy Rate. The Cash Reserve Ratio was maintained at 45.00 percent for Deposit Money Banks and 16.00 percent for Merchant Banks, while the Liquidity Ratio remained unchanged at 30.00 percent.

Analysts at Coronation Merchant Bank said the easing stance could buoy fixed income markets. “If there is a cut, we anticipate continued yield moderation in the fixed income space, making current holdings more valuable for investors,” the firm said in a note.

The rate reduction signals the Monetary Policy Committee’s growing confidence that inflation risks are easing sufficiently to create room for growth-supportive measures, even as authorities continue to stress price stability as a core mandate.

 

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Hope Moses-Ashike is an Associate Editor, Banking and Finance, with more than a decade of experience reporting on Nigeria’s financial system and broader economy. She closely tracks market movements, monetary policy decisions, company disclosures, regulatory actions, economic indicators, and global developments, and interprets what they mean for businesses, investors, policymakers, and households. Her reporting helps readers understand complex issues such as inflation trends, foreign exchange market dynamics, interest rate decisions, bank performance, and investment risks. She also covers major international events and periodically travels to Washington, D.C., to report on the World Bank/IMF Spring and Annual Meetings. Her dedication to financial journalism has earned her multiple recognitions and invitations to high-level professional development programmes. She is an alumna of the International Visitors Leadership Programme (IVLP) in the United States and holds an Advanced Financial Journalism Certificate from the Press Association Training in London, UK. Her other notable achievements include completing the Lagos Business School CMC Programme, the Bloomberg Media Africa Initiative Programme, and a Master Class in Journalism at Rhodes University in South Africa.

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