The Central Bank of Nigeria (CBN) has reduced the country’s benchmark interest rate from 26.5 per cent to 23 per cent, following the conclusion of its latest Monetary Policy Committee (MPC) meeting in Abuja.
CBN Governor Olayemi Cardoso announced the decision on Tuesday, September 22, 2026, at the end of the committee’s 307th meeting. The 350-basis-point reduction is the first major rate cut since the CBN kept the rate at 26.5 per cent at its previous two meetings.
Why the CBN Cut the Rate
The decision comes as Nigeria’s inflation rate has continued to moderate.
According to the National Bureau of Statistics, headline inflation fell slightly from 15.43 per cent in July to 15.39 per cent in August 2026. Food inflation also declined during the period.
The CBN said the adjustment was intended to strengthen the transmission of monetary policy and restore the Monetary Policy Rate as the main signal for interest rates in the economy.
Cardoso also stressed that the decision should not be interpreted simply as a shift toward monetary easing. The CBN described the move as an operational reset designed to improve the effectiveness of its monetary policy framework.
Cash Reserve Requirements Remain Unchanged
While cutting the benchmark rate, the MPC retained existing Cash Reserve Requirement (CRR) levels.
The CRR remains at 45 per cent for deposit money banks, 16 per cent for merchant banks, and 75 per cent for non-Treasury Single Account public-sector deposits.
The committee also recalibrated the Standing Facilities Corridor to +50/-300 basis points around the new 23 per cent MPR.
What the New Rate Means
The Monetary Policy Rate is the CBN’s benchmark for influencing borrowing costs and conditions in the financial system.
A lower benchmark rate can affect lending and money-market rates, although the impact on what individuals and businesses pay to borrow depends on how commercial banks and other financial institutions respond.
The latest decision brings the MPR to its lowest level since February 2024, when it stood at 22.75 per cent before subsequent increases.
CBN Points to Improving Economic Conditions
The MPC also pointed to improvements in Nigeria’s broader economic conditions.
Nigeria’s economy grew by 4.43 per cent in real terms in the second quarter of 2026, while the country’s external reserves stood at about $55.25 billion as of September 18, according to figures cited by the CBN governor.
Despite the improvement in inflation, the CBN continues to monitor risks that could put renewed pressure on prices.
For now, the new 23 per cent benchmark rate marks a significant change from the 26.5 per cent rate maintained earlier in the year, as the central bank continues its efforts to strengthen monetary policy transmission while keeping inflation under control.