CBN cuts benchmark rate to 26.5% as inflation eases for 11th straight month
Nigeria’s central bank has lowered its benchmark interest rate by 50 basis points to 26.5%, signalling cautious optimism that inflationary pressures are easing after nearly a year of steady decline.
The decision was announced at the 304th meeting of the monetary policy committee (MPC), held in Abuja on Tuesday. The governor, Olayemi Cardoso, said the committee voted unanimously for the reduction.
“The committee decided to reduce the monetary policy rate by 50 basis points to 26.50%,” Cardoso said, describing the move as a response to improving macroeconomic indicators and a sustained moderation in headline inflation.
The MPC retained the liquidity ratio at 30% and adjusted the standing facilities corridor to +50 and -450 basis points around the monetary policy rate. The cash reserve ratio (CRR) was left unchanged at 45% for commercial banks and 16% for merchant banks, while the 75% CRR on non-TSA public sector deposits was also maintained.
Cardoso said the decision followed “a balanced evaluation of risks” and was underpinned by what he described as an ongoing disinflationary trend. Headline inflation slowed in January 2026 for the 11th consecutive month, reflecting the lagged effects of earlier monetary tightening, relative exchange rate stability and improved food supply.
He attributed the downward trajectory to contractionary policies implemented over the past year, stability in the foreign exchange market, robust capital inflows and a stronger balance of payments position. Relative stability in petroleum product prices and improved supply of staple foods further reinforced the easing trend, he added.
The committee also noted what it described as a marked improvement in Nigeria’s external sector performance, citing higher export earnings and increased remittance inflows. These developments, Cardoso said, have helped strengthen foreign exchange stability and bolster investor confidence.
MPC members welcomed the recently issued Presidential Executive Order 09, which redirects oil and gas revenues into the federation account. According to the governor, the measure is expected to enhance fiscal revenues and support macroeconomic stability.
The monetary policy rate (MPR) serves as the central bank’s primary tool for managing inflation, liquidity and broader economic stability. At its previous meeting in November, the MPC had held the rate at 27%. The last rate cut before Tuesday’s decision occurred in September.
Data from the National Bureau of Statistics show that inflation edged down to 15.10% in January from 15.15% in December, reinforcing the central bank’s view that price pressures are gradually moderating.
While the rate cut is modest, it marks a shift in tone after an extended period of aggressive tightening, suggesting policymakers believe the worst of the inflation surge may have passed — though risks to the outlook remain.