The Central Bank of Nigeria has cut its benchmark interest rate to 26.5%, a move members of the organized private sector described as modest but a positive signal for businesses and the broader economy.
At the end of its 304th meeting in Abuja, the Monetary Policy Committee reduced the Monetary Policy Rate by 50 basis points from 27% to 26.5%. All 11 members attended the meeting.
CBN Governor Olayemi Cardoso announced the decision on Tuesday.
“The committee decided to reduce the monetary policy rate by 50 basis points to 26.5%,” Cardoso said.
The MPC also retained the standing facilities corridor at +50/-450 basis points around the MPR and left the Cash Reserve Requirement unchanged at 45% for deposit money banks, 16% for merchant banks and 75% for non-Treasury Single Account public sector deposits.
The rate cut is the second under the current leadership, following a similar reduction in September 2025 and a hold in November 2025.
Cardoso said the decision was based on a “balanced evaluation of risks,” adding that the disinflation trend is expected to continue, supported by the delayed effects of earlier monetary tightening, exchange rate stability and improved food supply.
Headline inflation eased to 15.10% in January 2026 from 15.15% in December 2025, marking the 11th consecutive month of year-on-year decline, he said. Food inflation fell to 8.89% from 10.84%, while core inflation declined to 17.72% from 18.63%.
On a month-to-month basis, inflation dropped to -2.88% in January from 0.54% in December, signaling continued easing of price pressures.
The committee also welcomed Presidential Executive Order 09, which redirects oil and gas revenues into the Federation Account, noting its potential to improve fiscal revenue and boost external reserves.
The next MPC meeting is scheduled for May 19-20, 2026.
Private sector reaction
Members of the organized private sector said the rate cut, though limited, signals a gradual shift toward supporting economic growth.
Director-General of the Nigeria Employers Consultative Association, Adewale Oyerinde, said the move indicates that monetary authorities are responding to pressures facing businesses.
“The marginal reduction represents a cautious but noteworthy signal,” he said, adding that it may not immediately translate into significantly lower lending rates.
He noted that tight liquidity conditions remain, with a large portion of bank deposits still sterilized, limiting the ability of financial institutions to expand credit.
Segun Kuti-George of the National Association of Small-Scale Industrialists described the decision as a deliberate adjustment to preserve recent monetary gains.
“With these adjustments, there will hopefully be relative stability,” he said, noting improvements in food prices compared with last year.
Muda Yusuf, director of the Centre for the Promotion of Private Enterprise, said the policy is growth-supportive but warned that structural constraints could limit its impact.
“Unless these rigidities are addressed, the benefits of monetary easing may not fully translate into lower borrowing costs,” he said, adding that fiscal consolidation remains critical.
The Lagos Chamber of Commerce and Industry also described the move as cautious and supportive of a shift toward economic stabilization and investment-led growth.
Director-General Chinyere Almona said the decision signals a transition from aggressive monetary tightening to a stabilization phase anchored on disinflation and improved supply conditions.
However, she said businesses still need tangible reductions in financing costs to expand production and sustain jobs.
The chamber called for sustained but gradual easing, alongside reforms in power supply, transport logistics, agriculture and the broader business environment, to support long-term economic growth.
