Nigeria’s apex bank has trimmed its benchmark lending rate in what business leaders describe as a cautious but encouraging step toward economic recovery. At the 304th meeting of the Monetary Policy Committee, the Central Bank of Nigeria reduced the Monetary Policy Rate by 50 basis points to 26.5 per cent from 27 per cent. Governor Olayemi Cardoso announced the decision in Abuja, stating that the committee adopted a balanced approach aimed at sustaining disinflation while preserving financial system stability.
Despite the modest rate cut, the MPC retained key monetary parameters, including the Standing Facilities Corridor and the Cash Reserve Ratio at 45 per cent for Deposit Money Banks, 16 per cent for Merchant Banks, and 75 per cent for non-TSA public sector deposits. Cardoso explained that the move was guided by improving inflation data, with headline inflation easing to 15.10 per cent in January 2026 — the eleventh consecutive month of year-on-year decline. Food inflation dropped significantly to 8.89 per cent, while month-on-month headline inflation fell sharply to -2.88 per cent, indicating softening price pressures across the economy.
The decision marks the second rate cut under Cardoso’s leadership, following a similar reduction in September 2025. The governor also welcomed the newly issued Presidential Executive Order 09, which redirects oil and gas revenues into the Federation Account, noting its potential to strengthen fiscal buffers and external reserves. He reaffirmed the Bank’s commitment to evidence-based policymaking anchored on price stability and financial resilience, with the next MPC meeting scheduled for May 19 and 20, 2026.
Members of the Organised Private Sector (OPS) reacted positively, though cautiously, to the development. Director-General of the Nigeria Employers’ Consultative Association, Adewale Oyerinde, described the move as a noteworthy signal that monetary authorities are responding to mounting pressures on businesses. However, he warned that tight liquidity conditions, particularly the high Cash Reserve Ratio, may continue to limit banks’ capacity to expand credit to the real sector in the short term.
Similarly, the Lagos Chamber of Commerce and Industry and the Centre for the Promotion of Private Enterprise described the policy shift as growth-supportive but stressed that structural and fiscal reforms remain critical. Business leaders urged coordinated action to address infrastructure gaps, power supply, logistics, and regulatory bottlenecks to ensure the CBN interest rate cut to 26.5% translates into lower borrowing costs, job preservation, and renewed investor confidence. For many employers and small manufacturers navigating high operating costs, the modest cut offers hope — but tangible relief, they say, will depend on deeper reforms beyond monetary easing alone.
source: punch