The Monetary Policy Committee of the Central Bank of Nigeria has cut the benchmark interest rate to 23 per cent from 26.5 per cent, in a move that surprised analysts and economists.
The CBN Governor, Olayemi Cardoso, announced the decision on Tuesday at the end of the committee’s 307th meeting in Abuja.
“The Committee decided as follows: reset the monetary policy rate to 23 per cent,” Cardoso said.
The 350-basis-point reduction is the biggest rate cut in recent times and the lowest level since February 2024 . It follows a hold at the two previous MPC briefings, and a 50-basis-point cut announced in February 2026 .
Cardoso said the decision was aimed at strengthening monetary policy transmission, noting that market rates had diverged from the benchmark lending rate, making the policy less effective .
Speaking at a press conference, Cardoso said the rate reduction should be seen as “an operational reset to enhance the effectiveness of monetary policy and support the transition to an inflation targeting framework” .
He said the committee also cut the asymmetric corridor around the MPR to +50/-300 basis points, while retaining the Cash Reserve Ratio at 45 per cent for deposit money banks and 16 per cent for merchant banks .
The MPC emphasised that the recalibration of the corridor does not constitute a change in the current monetary policy stance, but rather an operational reset .
The MPC’s decision to cut rates occurred amid consecutive decreases in Nigeria’s inflation rates. According to the most recent Consumer Price Index report released by the National Bureau of Statistics, Nigeria’s headline inflation rate eased marginally to 15.39 per cent in August 2026 from 15.43 per cent recorded in July .
This marked the third consecutive monthly decline after three consecutive monthly increases, and the figure is 7.75 percentage points below the 23.14 per cent recorded in August 2025 .
More significantly, month-on-month inflation slowed sharply to 0.71 per cent in August from 1.57 per cent in July, its lowest pace this year. Core inflation, which excludes volatile agricultural produce and energy, fell to 13.29 per cent from 14.97 per cent, while food inflation declined to 19.57 per cent from 20.31 per cent .
The rate cut caught analysts by surprise. All seven economists polled by Reuters had predicted the CBN would leave the rate unchanged at 26.5 per cent for the third policy meeting in a row .
Similarly, the median estimate of eight economists polled by Bloomberg was for rates to be held steady, with only three predicting a cut .
Analysts had thought the central bank would opt for a cautious approach, given risks from rising fuel prices, which have surged to record highs, and the risk that pre-election spending could fuel inflation .
Cardoso acknowledged that the moderation in inflation indicated the effectiveness of previous policy tightening measures, sustained exchange rate stability and improved inflation expectations .
