CBN cuts interest rate to 26.5% as inflation eases and growth outlook improves

The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) has reduced the Monetary Policy Rate (MPR) from 27 per cent to 26.5 per cent.

Olayemi Cardoso, CBN’s governor, announced the rate adjustment at a news conference on Tuesday during the committee’s 304th meeting in Abuja.

The Monetary Policy Committee of the Central Bank lowered the policy rate by 50 bps to 26.50%, from 27%, while keeping key parameters unchanged.

The authority retained the asymmetric corridor around the MPR at +50bps/-450bps and kept the cash reserve ratio (CRR) for commercial banks at 45.00%.

CRR for merchant banks was retained at 16.00%, along with a 30% liquidity ratio. The CBN also retained the 75.0% CRR on Non-TSA public sector deposits.

Inflation has been easing with the latest reading at 15.10% in January 2026, and the pressure on prices is no longer as intense as before. In a commentary note, Cowry Asset Limited said this slowdown in inflation has provided the CBN room to slightly relax monetary conditions without risking price instability.

Also, at the meeting, the Cash Reserve Ratio (CRR) was left unchanged at 45% for commercial banks and 16% for merchant banks, while the Liquidity Ratio remained at 30% as the CBN remains cautious about rate loosening while still maintaining strong control over system liquidity.

“The upshot from this MPC meeting is that a lower policy rate can gradually reduce borrowing costs for the real sector of the economy. While lending rates may not fall immediately, the direction is now more supportive for businesses and economic activity.

“With interest rates beginning to come down, fixed-income returns may become less attractive over time. This supports continued interest in equities and other risk assets, especially for investors seeking better long-term returns”, the investment firm said.

The research unit of Cowry Asset Limited believes the decision signals a careful shift from aggressively fighting inflation to supporting growth, while maintaining financial stability as the focus. It’s a measured step and not a full easing cycle yet, but a clear change in tone.