The Digest:
The Central Bank of Nigeria's (CBN) Monetary Policy Committee (MPC) has reduced the Monetary Policy Rate (MPR) from 27 percent to 26.5 percent, the lowest level since May 2024 when it stood at 26.25 percent. Governor Olayemi Cardoso announced the 50-basis-point cut at the committee's 304th meeting in Abuja, citing sustained disinflation trajectory with headline inflation dropping to 15.1 percent in February 2026. The Cash Reserve Ratio (CRR) remains unchanged at 45 percent for Deposit Money Banks and 16 percent for merchant banks, with Liquidity Ratio retained at 30 percent. Cardoso noted gross external reserves have risen to $50.45 billion as of February 16, 2026, the highest in 13 years, supported by FX stability, robust capital inflows, and stronger balance of payments. FXTM analyst Mathew Anthony described the cut as "positive" amid cooling inflation, stronger naira, and rising reserves.
Key Points:
- The rate cut reduces borrowing costs, potentially stimulating economic activity.
- It reflects confidence in sustained inflation decline and currency stability.
- Businesses and borrowers gain relief, while savers face lower returns.
- This signals CBN's pivot toward growth-supportive monetary policy.
- The timing, with reserves at 13-year high, provides policy space.
Sources: The Cable, CBN, FXTM
