The Central Bank of Nigeria (CBN) has reduced its benchmark interest rate by 50 basis points to 26.5 per cent, marking a shift toward moderate monetary easing amid sustained disinflation and improved macroeconomic indicators.
CBN Governor Olayemi Cardoso announced the decision on Tuesday at the end of the two-day Monetary Policy Committee (MPC) meeting.
He said the committee resolved to reduce the Monetary Policy Rate (MPR) by 50 basis points to 26.5 per cent, retain the asymmetric corridor around the MPR at +50 to -450 basis points, and maintain the Cash Reserve Ratio (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.
“The committee’s decision was premised on a balanced evaluation of risk to the outlook, which suggests that the ongoing disinflation trajectory would continue, largely supported by the land transmission of previous monetary tightening, sustained exchange rate stability and enhanced food supply considerations.
“In reaching this policy decision, the committee took into account the sustained deceleration in year-on-year headline inflation in January 2026, marking the 11th consecutive month of decline,” Cardoso said.
He noted that the headline inflation eased to 15.10 per cent in January 2026 from 15.15 per cent in December 2025, reflecting a moderation in both food and core components.
Food inflation declined to 8.89 per cent from 10.84 per cent, supported by improved domestic food supply, sustained exchange rate stability and favourable base effects.
Core inflation also moderated to 17.72 per cent from 18.63 per cent, driven largely by lower prices in information and communication services.
Cardoso further noted that on a month-on-month basis, headline inflation fell to -2.88 per cent in January from 0.54 per cent in December.
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He attributed the easing inflationary pressures to tight monetary policy, foreign exchange stability, stronger capital inflows and improvements in the balance of payments.
“The momentum was further reinforced by relative stability in the prices of petroleum products and improved food supply conditions, especially staples. These outcomes have indicated that their prior tightening has continued to anchor expectations.
“The MPC particularly noted the remarkable performance of Nigeria’s external sector, evidenced by the robust attraction to foreign exchange reserves, supported by higher export earnings and increased remittance inflows,” Cardoso said.
He added that stronger reserves and external inflows had bolstered investor confidence and stabilised the foreign exchange market.
According to him, gross external reserves rose to $50.45 billion as of February 16, 2026, the highest level in 13 years, providing import cover of about nine months for goods and services.
“Members also welcomed the newly issued presidential Executive Order 09, which redirects oil and gas revenues into the Federation account. Given these improved macroeconomic conditions, the committee believed that a moderate easing was consistent with the prevailing inflation dynamics,” Cardoso said.
The CBN maintained that economic activity remains resilient, with the Purchasing Managers’ Index (PMI) at 55.7 points in January 2026, indicating continued expansion.
He said, looking ahead, the MPC noted domestic disinflation is expected to persist, supported by prior tightening, 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.
Globally, the apex bank projects stronger economic activity in 2026, underpinned by progress in trade negotiations, increased investment in artificial intelligence technologies and gradual monetary easing, although rising protectionism and geopolitical fragmentation remain headwinds.
Cardoso added that the MPC reaffirmed its commitment to an evidence-based policy framework anchored on price stability and safeguarding the resilience of the financial system.
Pinnacle Daily had earlier reported that Nigerians want relief in the rate cut as CBN holds its first MPC meeting for the year.
Alex is a business journalist cum data enthusiast with the Pinnacle Daily. He can be reached via ealex@thepinnacleng.com, @ehime_alex on X
