Tosin Ogunrinde
The Central Bank of Nigeria (CBN) has reduced the Monetary Policy Rate (MPR) by 50 basis points to 26.5 percent, aiming to support economic stability and stimulate growth. This decision, made at the 304th Monetary Policy Committee (MPC) meeting, marks the second rate cut in recent months and the first in 2026, following a similar reduction in September 2025 .
The CBN Governor, Olayemi Cardoso, explained that the committee’s decision was based on a balanced evaluation of risks, considering the ongoing disinflation trajectory, sustained exchange rate stability, and enhanced food supply. Headline inflation has declined for 11 consecutive months, reaching 15.10 percent in January 2026 .
The reduction in MPR is expected to lower borrowing costs for businesses and consumers, potentially boosting investment and economic activity. However, the CBN retained the Cash Reserve Ratio (CRR) for Deposit Money Banks at 45 percent and Merchant Banks at 16 percent, maintaining a cautious approach to monetary easing .
The CBN also welcomed the newly issued Presidential Executive Order 09, redirecting oil and gas revenues into the Federation Account, which is expected to improve fiscal revenue and accretion to reserves. Gross external reserves rose to $50.4 billion as of February 19, 2026, the highest level in 13 years.
The decision reflects the CBN’s confidence in the disinflation outlook, supported by exchange rate stability and improved food supply. However, the committee warned that increased fiscal releases, including election-related spending, could pose upside risks to the inflation outlook .
The MPR serves as the benchmark interest rate, influencing borrowing costs across the economy. A lower MPR can make credit more accessible, supporting economic growth, but the CBN must balance this with inflation control.
The next MPC meeting is scheduled for May 19-20, 2026. The CBN will continue to monitor inflation dynamics, exchange rates, credit conditions, and global economic developments to inform future policy decisions.
