CBN Cuts Interest Rate by 3.50% as Monetary Easing Begins
The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) cut the benchmark interest rate by 3.50% at the conclusion of its meeting in Sept. 2026.
The major policy easing brought down the country’s monetary policy rate (MPR) to 23%, marking its second interest rate cut this year. The authority signals a move towards a more accommodative monetary policy stance following its 307th policy meeting.
The Committee unanimously agreed to adjust the key monetary policy parameters, signalling a dovish shift amid mixed macroeconomic conditions.
The monetary authority retained the Cash Reserve Ratio (CRR) at 45.00% for Deposit Money Banks (DMBs) and 16.00% for Merchant Banks.
The CBN also retained the 75.00% CRR requirement on non-TSA public-sector deposits, maintained the Liquidity Ratio (LR) at 30.00%, and held the asymmetric corridor at +50/-300 bps around the MPR.
The MCPc’s decision was underpinned by the continued moderation in headline inflation, which declined for the fifth consecutive month, supported largely by relative stability in the foreign exchange market.
However, the Committee also acknowledged renewed pressures from rising food and core inflation components recorded in August 2026.
While recognising the persistence of inflationary pressures, the Committee noted that emerging risks are increasingly driven by external factors, including escalating global tariffs and geopolitical tensions in the Middle East, and their potential spillover effects on imported inflation.
Overall, the latest decision marks a notable shift in the country’s monetary policy direction, with the 350 bps reduction in the MPR representing a significant easing of financial conditions as the Bank seeks to balance price stability with support for economic activity.
