By Denis Matthew
In a significant shift in Nigeria’s macroeconomic strategy, the Central Bank of Nigeria (CBN) has lowered its benchmark interest rate, the Monetary Policy Rate (MPR), by 50 basis points to 26.5 percent from 27 percent.
The decision, announced by CBN Governor Olayemi Cardoso following the 304th Monetary Policy Committee (MPC) meeting on Tuesday, marks a strategic reprieve after a prolonged cycle of aggressive tightening.
Cardoso explained that the reduction follows a balanced assessment of risks to the economic outlook.
He noted that inflationary pressures are expected to continue their downward trajectory, bolstered by the lagged effects of previous monetary tightening and an improved domestic food supply.
The Committee’s decision was heavily influenced by what Cardoso described as the 11th consecutive month of year-on-year inflation moderation, signaling that the apex bank’s hawkish stance is yielding the desired stability.
While the benchmark rate was eased, the Committee opted for caution in other regulatory areas to maintain a guardrail against liquidity shocks.
The MPC retained the Cash Reserve Ratio (CRR) for deposit money banks at 45 percent and 16 percent for merchant banks. Additionally, the Committee upheld the 75 percent requirement for non-Treasury Single Account (non-TSA) public sector deposits, ensuring that the banking system remains sufficiently capitalized while the apex bank monitors the impact of the rate cut.
Reacting, the Centre for the Promotion of Private Enterprise (CPPE) welcomed the move, describing it as a vital growth-supportive signal for the private sector.
The Executive Director of the CPPE, Dr. Muda Yusuf, applauded the apex bank for recognizing improving macroeconomic fundamentals, including stronger external reserves and declining inflation.
Yusuf noted that easing the MPR is essential for boosting investor sentiment and creating a pathway for credit expansion into the real sector of the economy.
However, the CPPE warned that the success of this rate cut depends heavily on the effectiveness of the monetary transmission mechanism and sustained fiscal discipline.
Dr. Yusuf stressed that structural bottlenecks in the Nigerian economy often prevent benefits from reaching businesses through lower lending rates.
He urged the Federal Government to complement the CBN’s efforts with fiscal consolidation to safeguard macroeconomic stability. According to the CPPE, a disciplined fiscal approach combined with this new monetary direction could unlock significant opportunities in fixed income, equities, and real estate investments throughout the 2026 fiscal year.