The Central Bank of Nigeria (CBN) has reduced its Monetary Policy Rate (MPR) from 26.5 per cent to 23 per cent, marking its first major rate cut after months of maintaining a tight monetary policy to fight inflation and stabilise the economy.
The decision was announced on Tuesday by CBN Governor, Olayemi Cardoso, after the 306th meeting of the Monetary Policy Committee (MPC) held on September 21, 2026.
Cardoso said the committee was encouraged by the steady decline in inflation and the stability recorded in the banking sector following the successful recapitalisation of banks.
He said, “The committee was satisfied with the progress recorded in disinflation and noted the stability of the banking sector following the successful recapitalisation of banks.”
The 350-basis-point reduction is expected to gradually lower borrowing costs, making it easier for businesses, especially manufacturers and small and medium-sized enterprises, to access credit for expansion, production and job creation.
However, the CBN noted that the impact may not be immediate because commercial lending rates also depend on banks’ funding costs, credit risks, liquidity levels and operating expenses.
The rate cut is also expected to support key sectors such as agriculture, manufacturing, construction, real estate and consumer businesses by encouraging investment and economic activities.
Analysts, however, say stronger credit growth could increase demand in the economy and put fresh pressure on prices if local production does not keep pace.
The CBN has maintained an inflation-targeting policy in recent years, using interest rates and other monetary tools to control rising prices, while the latest decision suggests the apex bank now believes inflation has eased enough to support economic growth.
Investors and businesses will now watch closely to see whether banks reduce lending rates in response to the policy, as sustained lower inflation and cheaper credit could provide fresh momentum for private-sector investment and Nigeria’s economic recovery.
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