CBN cuts interest rate to 26.5% as inflation drops to 15.10%

The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) has reduced the Monetary Policy Rate (MPR) from 27 percent to 26.5 percent, following a sustained decline in Nigeria’s inflation rate to 15.10 percent in February 2026.

The decision was announced on Tuesday by the CBN Governor, Olayemi Cardoso, at the end of the committee’s 304th meeting held in Abuja.

Cardoso disclosed that members of the committee unanimously voted to cut the benchmark interest rate by 50 basis points, describing the move as part of efforts to consolidate the country’s disinflation trend.

The MPR, which serves as the baseline interest rate in the economy and influences lending rates across the banking sector, now stands at its lowest level since May 2024.

Despite the rate cut, other key monetary parameters were left unchanged. The cash reserve ratio (CRR) remains at 45 percent for Deposit Money Banks, 16 percent for merchant banks, and 75 percent for Non-TSA public sector deposits.

The liquidity ratio was retained at 30 percent, while the asymmetric corridor remains at +50/-450 basis points around the MPR.

According to Cardoso, the committee’s decision was based on a balanced assessment of economic risks and confidence that the downward inflation trajectory would continue.

He noted that January 2026 marked the 11th consecutive month of year-on-year headline inflation decline, reflecting sustained monetary tightening and improved macroeconomic conditions.

The CBN governor expressed optimism that inflation would continue to ease, supported by exchange rate stability and improved food supply. However, he cautioned that increased fiscal spending, particularly election-related outlays, could pose upside risks to the inflation outlook.

Cardoso also highlighted improvements in the external sector, revealing that Nigeria’s gross external reserves rose to $50.45 billion as of February 16, 2026 — the highest level recorded in 13 years. He attributed the development to stronger export earnings, higher remittance inflows, stable foreign exchange conditions, and robust capital inflows.

The next MPC meeting is scheduled to hold on May 19 and May 20, 2026.