The Central Bank of Nigeria has reduced its benchmark interest rate by 350 basis points to 23 per cent, following the conclusion of its 307th Monetary Policy Committee meeting in Abuja on Tuesday, 22 September 2026.
CBN Governor Olayemi Cardoso described the decision as a “reset” rather than a conventional cut, signalling that the committee was recalibrating the policy rate to align more closely with prevailing market rates rather than signalling a fundamental shift in its monetary stance. The reduction is the largest single adjustment to the MPR since 2006.
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Why the committee acted now
The MPC’s decision was underpinned by a clear and consistent improvement across Nigeria’s key macroeconomic indicators. Headline inflation moderated for the third consecutive month, easing to 15.39 per cent in August 2026 from 15.43 per cent in July. The economy grew by 4.43 per cent in the second quarter of 2026, driven by expansion in both oil output at 7.31 per cent and non-oil sectors at 4.31 per cent. A composite Purchasing Managers’ Index of 52.7 per cent further confirmed that private sector activity remained in positive territory.
External conditions also supported the decision. Nigeria’s current account surplus reached $7.54 billion in Q2 2026, bolstered by rising refined fuel exports and strong diaspora remittance inflows. External reserves stood at $53.3 billion, their highest level in 17 years, providing the buffer that allowed the committee to ease without triggering foreign investor concern about the naira.
The cut closes the gap between the MPR and the rates at which money was actually trading in Nigeria’s financial markets. The interbank rate and Standing Deposit Facility had been running near 22 per cent even as the MPR sat at 26.5 per cent, making the official policy rate increasingly disconnected from market reality.
The technical details
Alongside the rate reduction, the MPC recalibrated the Standing Facilities Corridor to plus 50 and minus 300 basis points around the new benchmark, placing the Standing Lending Facility at 23.5 per cent and the Standing Deposit Facility at 20 per cent. The Cash Reserve Requirement was held 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 Liquidity Ratio remained unchanged at 30 per cent.
Five of the eight economists surveyed by Bloomberg ahead of the meeting had expected the MPR to remain at 26.5 per cent, making the 350 basis point reduction considerably larger than most market participants anticipated.
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What comes next
Cardoso was careful to note that the recalibration does not constitute a change in the CBN’s underlying monetary policy stance. The committee said it would remain vigilant about election-related spending liquidity pressures in the approach to the 2027 electoral cycle and geopolitical risks in global energy markets.
Whether the rate cut delivers meaningful relief to Nigerian businesses will depend entirely on whether commercial banks pass the reduction through to their lending rates. Every previous adjustment in this cycle has been only partially transmitted, and the 45 per cent CRR, which limits how much deposit money banks can lend, remains in place.
