By Favour Mustapha
The Central Bank of Nigeria (CBN) has reduced the Monetary Policy Rate (MPR) by 350 basis points, from 26.5 per cent to 23 per cent, following the conclusion of its 307th Monetary Policy Committee (MPC) meeting in Abuja on Tuesday, September 22, 2026.
CBN Governor, Olayemi Cardoso, announced the decision at the end of the two-day meeting, marking a significant reduction in the benchmark rate after it had been retained at 26.5 per cent at the previous two MPC meetings.
The latest decision was larger than market expectations ahead of the meeting. A Bloomberg survey had found that five of eight economists expected the MPR to remain at 26.5 per cent, with estimates ranging between 25.5 per cent and 26.5 per cent.
The rate reduction comes amid a moderation in Nigeria’s inflation rate. According to the latest Consumer Price Index figures from the National Bureau of Statistics (NBS), headline inflation declined marginally from 15.43 per cent in July to 15.39 per cent in August 2026. The August figure represented the third consecutive monthly decline in headline inflation.
The MPC also recalibrated the Standing Facilities Corridor to +50/-300 basis points around the new MPR. However, the Cash Reserve Requirement (CRR) was retained at 45 per cent for Deposit Money Banks and 16 per cent for Merchant Banks, while the 75 per cent CRR on non-Treasury Single Account (TSA) public-sector deposits was also maintained.
The MPR is the CBN’s benchmark policy rate and influences the broader cost of funds within the financial system. A reduction can create room for lower borrowing costs if commercial banks transmit the change to their lending rates. It can therefore affect businesses seeking credit, household borrowing, investment decisions and returns on some interest-bearing savings and investments.
However, the reduction in the MPR does not automatically mean that commercial banks will immediately reduce their lending rates by the same margin. The eventual effect on borrowers and businesses will depend on banks’ funding costs, liquidity conditions, credit risks and other market factors.
The decision therefore marks a notable change in Nigeria’s monetary policy direction, coming against a backdrop of moderating inflation and ongoing efforts to improve monetary policy transmission.
The full implications of the rate cut for businesses, consumers and financial markets will depend largely on how quickly the new policy rate is transmitted through the banking and credit system.
Source: Central Bank of Nigeria, National Bureau of Statistics, Bloomberg, PUNCH, Vanguard.
