The Central Bank of Nigeria (CBN) has cut down its benchmark interest rate to 26.5 percent, marking a cautious shift from its extended tightening cycle as inflationary pressures show signs of easing.
The decision was announced on Tuesday by CBN Governor, Olayemi Cardoso, following the 304th meeting of the Monetary Policy Committee (MPC).
The monetary policy rate was lowered by 50 basis points from 27 percent, representing the second rate cut in five months.
The move signals growing confidence among policymakers that inflation is gradually moderating.
After months of aggressive rate hikes aimed at curbing inflation and stabilising the foreign exchange market, the apex bank is now carefully easing credit conditions for businesses and households.
Explaining the decision, Cardoso said the MPC adopted a balanced approach in assessing economic risks.
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“The committee’s decision was based on a balanced evaluation of risks to the outlook, which suggests that the ongoing disinflation path will continue,” he said.
According to the committee, earlier monetary tightening measures are beginning to yield positive results, particularly in exchange rate stability and the gradual slowdown in inflation.
Despite the rate cut, the MPC retained key liquidity control measures to maintain financial system stability.
The cash reserve requirement remains at 45 percent for commercial banks and 16 percent for merchant banks, ensuring tight liquidity conditions.
The standing lending and deposit facility corridor was adjusted to +50 and -450 basis points around the new 26.5 percent benchmark, defining the range within which banks can borrow from or lend to the CBN.
Cardoso also disclosed that 20 banks have met the recapitalisation requirements set by the regulator, describing the development as a reflection of the sector’s resilience and preparedness amid ongoing reforms.
With the latest policy adjustment, the CBN is attempting to strike a delicate balance, easing financial pressure on the real sector while maintaining macroeconomic discipline.
The bank reaffirmed that sustained exchange rate stability and improved food supply remain critical to anchoring inflation and supporting economic recovery.
