CBN Cuts Monetary Policy Rate to 23% in Its Largest-Ever Easing Move

The Central Bank of Nigeria has cut its benchmark monetary policy rate by 350 basis points to 23%, the largest single reduction since the rate was introduced, tightening the pace of a loosening cycle that began earlier in the year.

The decision was taken at the conclusion of the 307th meeting of the Monetary Policy Committee on September 22, 2026, in Abuja. The committee also adjusted the asymmetric corridor around the rate to plus 50 basis points and minus 300 basis points, leaving the cash reserve ratio unchanged at 45% for deposit money banks, 16% for merchant banks and 75% for non-interest banks.

Inflation easing gave room to move

The committee said the cut was supported by a third consecutive month of disinflation. The National Bureau of Statistics reported that headline inflation slowed to 15.39% in August 2026 from 15.43% in July, extending a deceleration that policy makers have credited to a more stable exchange rate, moderating food prices and the lagged effect of earlier tightening.

Gross external reserves were estimated at about $55 billion, a level the committee described as comfortable enough to support the naira and absorb external shocks. The naira has held near N1,315 to the dollar, its strongest level in about two years, helped by higher oil receipts, improved remittance flows and portfolio inflows.

The committee said the balance of risks now favoured a decisive easing step, while warning that it would not tolerate a return to price instability.

Why it matters for borrowers

The monetary policy rate is the anchor for the pricing of treasury bills, bonds and bank credit. A 350 basis point reduction does not translate automatically into cheaper loans, because banks weigh funding costs, non-performing loans and liquidity. But it lowers the floor for government securities, which in turn eases competition for deposits and can pull market interest rates down over time.

The reduction builds on an earlier 50 basis point cut in 2026, taking the cumulative easing for the year to 400 basis points. The policy rate had been held as high as 26.5% during the fight against inflation, one of the most aggressive tightening stances on the continent.

What to watch next

Analysts say the test for the central bank will be whether easing can stimulate private-sector credit without reigniting inflation. Businesses have long complained that double-digit borrowing costs have crowded out investment, while lenders have been content to hold high-yielding government paper.

The next meeting of the committee and the September inflation print are expected to shape whether the easing cycle continues at the same speed or slows to a more measured pace. For now, the direction of travel is clear.