CBN Cuts Interest Rate To 26.5% As Inflation Eases For 11th Straight Month

The Central Bank of Nigeria has reduced the Monetary Policy Rate (MPR) by 50 basis points to 26.5 per cent, marking a shift towards moderate easing amid sustained improvements in key macroeconomic indicators.

The decision was taken at the 304th meeting of the Monetary Policy Committee (MPC) held on February 23 and 24, 2026, with all eleven members in attendance.

In a communiqué presented by the Central Bank of Nigeria governor, Olayemi Cardoso at the end of the meeting in Abuja, the MPC said it retained the Standing Facilities Corridor at +50/-450 basis points around the MPR. The Committee also maintained the Cash Reserve Requirement (CRR) at 45 per cent for Deposit Money Banks, 16 per cent for Merchant Banks, and 75 per cent for non-TSA public sector deposits.

Cardoso explained that the decision was based on a balanced assessment of risks to the economic outlook, noting that the ongoing disinflationary trend is expected to persist. It attributed the continued moderation in prices to the lagged effects of previous monetary tightening, sustained exchange rate stability, and improved food supply conditions.

He stated that Headline inflation eased marginally to 15.10 per cent year-on-year in January 2026 from 15.15 per cent in December 2025, marking the eleventh consecutive month of decline. Food inflation dropped significantly to 8.89 per cent from 10.84 per cent, while core inflation moderated to 17.72 per cent from 18.63 per cent, driven largely by lower prices in Information and Communication services.

“On a month-on-month basis, headline inflation declined sharply to negative 2.88 per cent in January from 0.54 per cent in December, signalling a further softening of price pressures.”

The MPC noted that relative stability in petroleum product prices and favourable base effects also contributed to the downward trend.

The Apex bank boss highlighted strong improvements in the external sector, with gross external reserves rising to 50.45 billion dollars as of February 16, 2026, the highest level in thirteen years. The reserves position provides an import cover of 9.68 months for goods and services, supported by higher export earnings and increased remittance inflows.

Cardoso further explained that members also welcomed the implementation of Presidential Executive Order 09, which redirects oil and gas revenues into the Federation Account. According to the Committee, the measure has the potential to strengthen fiscal revenues and further boost foreign exchange reserves.

The MPC observed continued resilience in the banking sector, with key financial soundness indicators remaining within regulatory thresholds. It noted that out of 33 banks that raised additional capital under the ongoing recapitalisation programme, 20 have met the new minimum capital requirement, signalling steady progress towards a stronger financial system.

On domestic output, the Purchasing Managers’ Index stood at 55.7 points in January 2026, indicating sustained expansion in economic activities and a likely improvement in fourth-quarter 2025 output. The Committee expressed optimism that improved macroeconomic stability would support growth momentum.

Looking ahead, the MPC projected that the current disinflation trend would continue in the near term, anchored on exchange rate stability and improved food supply. However, it cautioned that increased fiscal spending, including election-related outlays, could pose upside risks to inflation.

The Committee reaffirmed its commitment to evidence-based policymaking aimed at maintaining price stability and safeguarding financial system resilience.

PR/Umbwanko Baba