The Central Bank of Nigeria (CBN) has reduced the Monetary Policy Rate (MPR) by 50 basis points from 27.00% to 26.50%, the Monetary Policy Committee (MPC) announced at the end of its 304th meeting held in Abuja on Tuesday, February 24, 2026.
CBN Governor Olayemi Cardoso, who presided over the meeting, disclosed that the decision was unanimous among all MPC members. The committee retained the Cash Reserve Ratio (CRR) at 45% for commercial banks and 16% for merchant banks, while maintaining the 75% CRR on non-Treasury Single Account (TSA) public sector deposits. The asymmetric corridor around the MPR was adjusted to +50 to -450 basis points, and the Liquidity Ratio was kept at 30%.
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Rationale for the Rate Cut Governor Cardoso explained that the decision was driven by a balanced assessment of risks to the inflation outlook, which continues to show sustained disinflation. Key supporting factors include: 11 consecutive months of declining year-on-year headline inflation as of January 2026, Continued transmission of previous monetary tightening measures., Relative stability in the foreign exchange market, Robust capital inflows and improved balance of payments position and Stability in petroleum product prices and enhanced food supply conditions, especially for staples.
“The downward trajectory in inflation has been reinforced by these positive developments, anchoring expectations and providing room for measured policy easing,” Cardoso said.
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External Sector Performance The Governor highlighted remarkable improvements in Nigeria’s external sector, driven by higher export earnings, increased remittance inflows, and greater stability in the foreign exchange market. He also welcomed Presidential Executive Order 09, which redirects oil and gas revenues into the Federation Account, describing it as a crucial step toward improving fiscal revenue performance.
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Context & Previous Decisions The February cut marks the first reduction in the MPR since September 2025, when the rate was adjusted downward from 27.50% to 27.00%. In November 2025, the MPC had held the rate steady at 27.00%.
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The decision comes against a backdrop of moderating inflation (headline rate dropped to 15.10% in January 2026 from 15.15% the previous month, according to the National Bureau of Statistics) and relative FX stability, providing the committee room to begin gradual easing while remaining vigilant on price pressures.
Financial markets responded positively, with the naira gaining marginally against the dollar in early trading. Analysts view the move as a “cautious pivot” toward growth support without risking renewed inflationary pressure why Commercial banks are expected to adjust lending rates downward in response to the MPR cut, potentially easing borrowing costs for businesses and households.
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The MPC’s next meeting is scheduled for March 2026.
By Ogungbayi Beedee Adeyemi
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