The Central Bank of Nigeria (CBN) has cut its benchmark interest rate, the Monetary Policy Rate (MPR), by 350 basis points to 23 per cent from 26.5 per cent.
Olayemi Cardoso, CBN governor, announced the decision on Tuesday after the 307th meeting of the Monetary Policy Committee (MPC) held in Abuja.
The reduction represents the biggest cut in the benchmark rate recorded by the apex bank.
The MPC also adjusted the standing facilities corridor to +50/-300 basis points around the new MPR.
With the adjustment, the Standing Lending Facility is now 23.5 per cent, while the Standing Deposit Facility is 20 per cent.
The committee, however, retained the existing Cash Reserve Requirement (CRR) for banks and non-Treasury Single Account (TSA) public sector deposits.
Deposit Money Banks will continue to maintain a CRR of 45 per cent, while merchant banks will retain a 16 per cent requirement.
The CRR on non-TSA public sector deposits was also retained at 75 per cent.
The rate cut comes against the backdrop of easing inflation. Nigeria’s headline inflation rate slowed for the third consecutive month to 15.39 per cent in August from 15.43 per cent in July, according to the National Bureau of Statistics.
The MPC had retained the MPR at 26.5 per cent at its July 2026 meeting.
The latest decision marks a significant change in the CBN’s monetary policy stance after the benchmark rate remained unchanged at the previous meeting.
The reduction could affect borrowing costs, bank lending, investment and economic activity as lower policy rates reduce the benchmark cost of funds in the financial system.
However, the decision comes amid concerns over renewed inflationary pressures.
The CBN’s decision also comes as monetary authorities continue to balance efforts to support economic activity with the need to maintain price stability.
The 350-basis-point reduction means the MPR is now 8.5 percentage points below its previous level of 31 per cent recorded before the series of rate adjustments that brought it to 26.5 per cent.
The new 23 per cent MPR remains above the August inflation rate of 15.39 per cent, leaving a positive gap between the benchmark policy rate and headline inflation.
The MPC’s decision to leave CRR requirements unchanged means the rate cut was not accompanied by an additional release of funds through a reduction in banks’ reserve obligations.