TUE SEPT 22 2026-theGBJournal| The Central Bank of Nigeria (CBN) cut its benchmark interest rate by 350 basis points to 23 per cent on Tuesday, delivering its biggest rate reduction in the current easing cycle as inflation moderates and economic growth strengthens.
The Monetary Policy Committee lowered the Monetary Policy Rate from 26.5 per cent at its 307th meeting, after holding it at that level at its previous two meetings.
The decision follows three consecutive months of disinflation, a firmer naira and improving foreign-exchange reserves.
The move also comes against a stronger growth backdrop. Nigeria’s economy expanded 4.43 per cent in the second quarter, while business activity has continued to improve.
The MPC narrowed the asymmetric corridor around the MPR to +50/-300 basis points, from +50/-450 basis points.
It left banks’ cash reserve requirements unchanged, with the CRR for deposit money banks at 45 per cent and merchant banks at 16 per cent.
The CRR on non-Treasury Single Account public-sector deposits remained at 75 per cent, while the liquidity ratio was held at 30 per cent.
The decision marks a more decisive shift towards monetary easing after the CBN began cautiously reducing rates last year.
The central bank cut the MPR by 50 basis points in September 2025 and has since maintained a relatively restrictive stance as it sought to consolidate the decline in inflation.
For lenders, the cut could eventually lower the cost of credit, although the pass-through is unlikely to be one-for-one.
Banks continue to face a high 45 per cent reserve requirement, while funding costs and credit risks will influence how quickly they reduce lending rates.
The decision also comes as Nigerian financial markets have begun pricing in lower interest rates.
A sustained easing cycle could put further pressure on yields on government securities and encourage banks and investors to shift towards credit and other risk assets.
The CBN’s challenge will be to ensure that the lower policy rate feeds through to the broader economy without reigniting inflation or putting pressure on the naira.
Governor Olayemi Cardoso said at the briefing that the MPC’s decision followed its assessment of the improving domestic outlook and evolving risks.
The committee has previously said that sustained exchange-rate stability, improved food supply and the lagged effects of earlier monetary tightening should support further disinflation.
The September decision puts the CBN on a more pronounced easing path, while leaving its main liquidity management tools largely unchanged.
By Charles IKE-OKOH
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