CBN Cuts Interest Rate to 26.5% as Inflation Eases

The Central Bank of Nigeria (CBN) has reduced its benchmark interest rate for the second time in five months, lowering the Monetary Policy Rate (MPR) to 26.5 percent in a move aimed at supporting economic growth as inflation shows signs of moderation.

The decision was announced on Tuesday by the Governor of the apex bank, Olayemi Cardoso, at the end of the two-day Monetary Policy Committee (MPC) meeting held in Abuja.

Latest data from the National Bureau of Statistics showed that Nigeria’s headline inflation rate eased marginally to 15.10 percent in January 2026, down from 15.15 percent recorded in December 2025. The slight decline has strengthened expectations of a gradual monetary easing cycle following months of aggressive tightening.

The latest adjustment follows a previous rate cut in September 2025, when the MPR was reduced to 27 percent from 27.5 percent. That move marked a policy shift after years of rate hikes aimed at curbing persistent inflationary pressures and stabilising the naira.

Prior to the recent easing cycle, the last time the CBN reduced rates was in September 2020, when the MPR was cut from 12.5 percent to 11.5 percent to cushion the economic impact of the COVID-19 pandemic.

Despite the rate cut, the MPC retained other key monetary parameters. The asymmetric corridor was maintained at +50/-450 basis points around the MPR. The Cash Reserve Ratio (CRR) remained at 45 percent for Deposit Money Banks and 16 percent for Merchant Banks, while the Liquidity Ratio was left unchanged at 30 percent.

Market analysts say the easing stance could support activity in the fixed income market. Analysts at Coronation Merchant Bank noted that a rate cut would likely sustain yield moderation, potentially boosting the value of existing fixed-income investments.

The CBN’s latest move signals growing confidence among policymakers that inflationary risks are gradually subsiding, creating room for measures that support economic expansion, even as price stability remains the bank’s primary mandate.