CBN Cuts Benchmark Interest Rate to 26.5% in First 2026 Easing Move

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 The Central Bank of Nigeria (CBN) has reduced its benchmark Monetary Policy Rate (MPR)—commonly referred to as the interest rate—from 27% to 26.5%, marking a 50 basis point cut. This decision was announced by CBN Governor Olayemi Cardoso at the conclusion of the 304th Monetary Policy Committee (MPC) meeting held in Abuja on February 23-24, 2026.

This represents the first rate cut of 2026 and the lowest level since May 2024, signaling a cautious shift from the aggressive tightening cycle that has been in place for nearly two years. The move follows sustained disinflation, with headline inflation easing to 15.1% in January 2026 (its tenth consecutive monthly decline), improved exchange rate stability, enhanced food supply, and stronger external reserves (reportedly hitting around $50.4 billion in recent updates).

Key Details from the MPC Decision

Monetary Policy Rate (MPR): Reduced by 50 basis points to 26.5%.

Other parameters retained:

Cash Reserve Ratio (CRR) at 45% for commercial banks and 16% for merchant banks.

Liquidity Ratio at 30%.

Asymmetric standing facilities corridor at +50/-450 basis points around the MPR.

The committee described the decision as premised on a "balanced evaluation of risks to the outlook," with expectations that the disinflation trajectory will continue. While easing borrowing costs to support economic growth and credit expansion, the CBN emphasized a data-driven approach and vigilance on potential risks, including election-year spending pressures.

Finance Minister Wale Edun welcomed the cut as a sign of growing confidence in economic stabilization efforts.

Implications

This modest adjustment is expected to gradually lower borrowing costs for businesses and consumers, potentially stimulating investment and economic activity while supporting the naira. Analysts view it as a measured restart of the easing cycle rather than an aggressive pivot, with forecasts suggesting further cuts possible later in 2026 if inflation continues to moderate toward single digits.

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