Central Bank of Nigeria Reduces Monetary Policy Rate by 50 Basis Points to 26.5 Percent to Stimulate Economic Activity Across Nigeria

The Central Bank of Nigeria (CBN) has announced a reduction in the Monetary Policy Rate (MPR) from 27% to 26.5%, a move aimed at stimulating economic activity.

The decision was confirmed by CBN Governor Olayemi Cardoso following a meeting of the bank’s Monetary Policy Committee on Tuesday.

This is part of the CBN’s ongoing effort to balance inflation control with supporting growth in key sectors of the Nigerian economy.

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Key Policy Details Remain Unchanged

While the MPR has been eased, the CBN has retained several other policy instruments at their current levels.

The standing facilities corridor remains at +50 to -450 basis points, while Cash Reserve Requirements (CRR) are unchanged: 45% for deposit money banks, 16% for merchant banks, and 75% for non‑TSA public sector deposits.

These measures ensure that the banking sector maintains sufficient liquidity while the central bank carefully monitors inflationary pressures.

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Economic Implications of the Rate Cut

Analysts suggest that the 50-basis-point reduction could provide modest relief to businesses and borrowers, particularly in the manufacturing and agricultural sectors, where financing costs have been relatively high.

Lower borrowing costs could stimulate investment, support job creation, and boost overall economic activity.

However, some experts caution that easing the MPR may have limited impact if structural challenges such as energy supply issues, foreign exchange volatility, and high operational costs for businesses are not simultaneously addressed.

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What’s next?

The CBN will continue to assess economic indicators in the coming months, including inflation trends, exchange rates, and credit flows, to determine whether further adjustments to the MPR or other policy tools are needed.

Market observers will be watching for any signals from Governor Cardoso on potential interventions in the foreign exchange market or additional liquidity measures to support banks and businesses.

Meanwhile, banks may pass on the MPR reduction to customers through slightly lower lending rates, but the speed and extent of such adjustments could vary across financial institutions.

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Summary

The Central Bank of Nigeria has reduced the Monetary Policy Rate by 50 basis points to 26.5%, while leaving the standing facilities corridor and Cash Reserve Requirements unchanged.

The move is intended to stimulate economic activity amid ongoing inflationary pressures.

Analysts say the cut could ease borrowing costs and encourage investment, but structural economic challenges may limit its effect.

The CBN will continue monitoring key economic indicators to guide future policy decisions.