The Central Bank of Nigeria has cut its benchmark interest rate by 350 basis points to 23 per cent from 26.5 per cent, citing easing inflation, improved foreign exchange conditions and stronger macroeconomic stability.
CBN Governor, Olayemi Cardoso, announced the decision on Tuesday 22 September 2026 at the end of the Monetary Policy Committee’s 307th meeting in Abuja, describing the move as a recalibration of monetary policy rather than a shift towards broad-based easing.
“The Committee decided as follows: reset the monetary policy rate at 23 per cent,” Cardoso said.
The MPC also adjusted the standing facilities corridor to +50/-300 basis points around the MPR, while retaining the Cash Reserve Requirement at 45 per cent for deposit money banks, 16 per cent for merchant banks and 75 per cent for non-Treasury Single Account public-sector deposits.
The decision followed two consecutive holds at 26.5 per cent in May and July, after the committee had reduced the rate by 50 basis points in February.
Despite the size of the latest cut, Cardoso stressed that monetary policy remained restrictive. “You should not see this as an easing. This is a reset and a recalibration. That is all it is,” he said.
He explained that the widening gap between the MPR and prevailing interbank rates had weakened the transmission of monetary policy, making it necessary to realign the benchmark with prevailing market conditions.
According to the MPC, the adoption of the Nigerian Overnight Financial Average as a transaction-based operational benchmark had improved transparency in money-market operations, while the recalibration would restore the MPR as the principal signal of monetary policy.
Cardoso said the decision was supported by changing economic fundamentals, arguing that the aggressive tightening implemented in previous years had helped restore macroeconomic stability. “The tight thing that we have done, in our view, has done its job. It has worked,” he said.
The governor pointed to easing foreign exchange pressures, stronger investor confidence and an improved external position as evidence of the changing economic environment.
Nigeria’s gross external reserves stood at $55.25bn as of September 18, 2026, their highest level in 18 years and sufficient to finance about 11.3 months of imports of goods and services.
The balance of payments surplus also rose to $3.51bn in the second quarter from $2.38bn in the first quarter, while the current account surplus increased by 67.92 per cent to $7.54bn from $4.49bn.
Cardoso attributed part of the improvement in external buffers to rising diaspora remittances, which he said had increased from about $200m when the CBN intensified its reforms to almost $1bn by July.
He said measures including wider access to Bank Verification Numbers for Nigerians abroad, tighter oversight of International Money Transfer Operators and dedicated settlement accounts had contributed to the increase.
Inflation has also continued to moderate. Headline inflation eased marginally to 15.39 per cent in August from 15.43 per cent in July, marking the third consecutive monthly decline. Food inflation fell to 19.57 per cent from 20.31 per cent, while core inflation dropped to 13.29 per cent from 14.97 per cent.
Month-on-month headline inflation slowed significantly to 0.71 per cent from 1.57 per cent. The MPC attributed the improvement to the impact of earlier monetary tightening, exchange-rate stability and improved inflation expectations, while projecting further moderation as food supplies improve during the harvest season.
However, the committee warned that geopolitical tensions in the Middle East and increased election-related spending could create fresh inflationary pressures. Cardoso said the CBN was already preparing to manage potential liquidity expansion as Nigeria approaches another election cycle.
“We will proactively deploy any tools and instruments to mop up any excess liquidity,” the governor said, adding that the bank would monitor currency in circulation, banking-system liquidity, monetary aggregates and foreign-exchange demand. He also warned against currency abuse and encouraged wider use of electronic payments because of their transparency and audit trail.
On economic growth, the MPC said real GDP expanded by 4.43 per cent in the second quarter of 2026, compared with 3.89 per cent in the first quarter. Non-oil growth accelerated to 4.31 per cent from 3.94 per cent, while oil-sector growth rose to 7.31 per cent from 2.57 per cent. The Composite Purchasing Managers’ Index also increased to 52.7 points in August from 51.1 points in July.
Cardoso, reflecting on his three years as CBN governor, said the bank had inherited an economy characterised by declining confidence, currency depreciation, high inflation and a dysfunctional foreign-exchange market. He cited the return to the CBN’s core price and financial-stability mandate, exchange-rate reforms, banking recapitalisation and rebuilding of external reserves among the major changes undertaken.
He also highlighted the recently signed fiscal-monetary coordination agreement between the CBN and the Federal Ministry of Finance as a critical step towards Nigeria’s planned transition to inflation targeting. According to him, institutionalising coordination would ensure that monetary and fiscal policy remained aligned beyond the tenure of individual officeholders.
The governor said previous Ways and Means financing and more than N10tn in intervention programmes had injected substantial liquidity into the economy, stressing that fiscal coordination would be necessary to sustain lower and more stable inflation.
The MPC said the CBN’s return to major global investment indices represented a vote of confidence that could attract additional foreign investment, deepen the capital market and improve foreign-exchange liquidity. The committee said future policy decisions would remain data-dependent as it assesses the impact of the latest recalibration.
The next MPC meeting is scheduled for November 23 and 24, 2026.
