CBN reduces interest rate to 26.50%

The Central Bank of Nigeria (CBN) has reduced its benchmark interest rate by 50 basis points, bringing the Monetary Policy Rate (MPR) down to 26.50 percent from 27 percent.The decision was announced at the conclusion of the banks 304th Monetary Policy Committee (MPC) meeting held in Abuja on Tuesday, February 24. CBN Governor Olayemi Cardoso said the move was unanimous among committee members.The committee decided to reduce the monetary policy rate by 50 basis points to 26.50 percent, Cardoso stated. He added that the liquidity ratio was retained at 30 percent, while the standing facilities corridor was adjusted to +50 and -450 basis points around the MPR. The Cash Reserve Ratio (CRR) was also maintained at 45 percent for commercial banks and 16 percent for merchant banks, with the 75 percent CRR on non-TSA public sector deposits unchanged.Cardoso explained that the rate cut followed a balanced assessment of risks to the economic outlook, noting that inflation has continued on a downward path. According to him, year-on-year headline inflation decelerated in January 2026 for the 11th consecutive month.The Committees decision was premised on a balanced evaluation of risk to the outlook which suggests that the ongoing disinflation trajectory would continue largely supported by the lag transmission of previous monetary tightening, sustained exchange rate stability and enhanced food supply, he said.He attributed the decline in inflation to the effects of earlier contractionary policies, stability in the foreign exchange market, robust capital inflows and improvements in the balance of payments. Cardoso also cited relatively stable petroleum prices and improved food supply, particularly staples, as contributing factors.The governor highlighted what he described as a strong performance in Nigerias external sector, pointing to higher export earnings and increased remittance inflows. This has contributed to greater stability in the foreign exchange market and bolstered investor confidence, he said.Cardoso also welcomed Presidential Executive Order 09, which redirects oil and gas revenues into the federation account, saying it would play a key role in improving fiscal revenue.The MPR serves as the benchmark rate used by the CBN to manage inflation, liquidity and overall macroeconomic stability. The committee had last retained the rate at 27 percent in November. The previous rate cut occurred in September last year.According to data from the National Bureau of Statistics, the countrys inflation rate fell slightly in January to 15.10 percent from 15.15 percent.The post CBN reduces interest rate to 26.50% appeared first on Linda Ikeji Blog.