CBN Slashes Interest Rate to 23% in Biggest Cut in History as Inflation Eases

Central Bank of Nigeria CBN has reduced its benchmark interest rate by 350 basis points to 23 per cent, marking the largest single cut to the Monetary Policy Rate MPR in the bank’s history and signalling a decisive shift in monetary policy as inflation continues to moderate.

CBN Governor, Dr. Olayemi Cardoso, announced the decision on Tuesday at the conclusion of the Monetary Policy Committee’s MPC 307th meeting, held over two days in Abuja. Announcing the committee’s resolution, Cardoso said the MPC decided to reset the monetary policy rate to 23 per cent.

The cut brings the MPR down from 26.5 per cent, and comes after the committee had held the rate steady at its two previous sittings, following an earlier 50-basis-point reduction announced in February 2026.

In taking the decision, Mr Cordoso explained that the rate decision follows a continued easing in consumer prices. Nigeria’s headline inflation rate declined marginally to 15.39 per cent in August 2026, compared with 15.43 per cent in July, according to the latest Consumer Price Index report from the National Bureau of Statistics.

 That marked the third straight month of easing inflation, which analysts say gave the committee room to move more aggressively on rates.

Ahead of the meeting, the naira had also shown resilience, trading around ₦1,329.86 per dollar at the official market, while gross external reserves climbed to $54.61 billion.

Beyond the headline rate cut, the MPC also adjusted the corridor around the MPR. The committee agreed to recalibrate the Standing Facilities Corridor to +50/-300 basis points around the MPR, while holding the Cash Reserve Requirement CRR steady at its previous levels.

Eleven members attended the 307th MPC meeting in Abuja.

The rate cut caps a period of gradual policy easing through 2026, following a 50-basis-point reduction to 26.5 per cent at the committee’s February meeting, and comes against a backdrop of a strengthening external reserves position and steady economic growth, with real GDP having grown 4.43 per cent year-on-year in the second quarter of the year.

The reduction is expected to lower borrowing costs across the economy, potentially easing financing pressures for businesses and households that have grappled with tight monetary conditions over the past two years.