26.5%: CBN Delivers New Interest Rate Cuts Amid Cooling Inflation
- Central Bank of Nigeria has cut benchmark interest rate to 26.5%, signalling cautious shift towards easing
- January 2026 data shows inflation easing slightly to 15.10%, bolstering confidence in gradual policy easing
- Financial analysts suggest lower rates could ease pressure on businesses and households in Nigeria's economy
Pascal Oparada is a journalist with Legit.ng, covering technology, energy, stocks, investment, and the economy for over a decade.
Nigeria’s monetary authorities have signalled a cautious shift toward easing, as the Central Bank of Nigeria trimmed its benchmark interest rate to 26.5 per cent.
The decision marks the second rate cut in five months and reflects growing confidence that inflationary pressures are gradually subsiding.
Source: Twitter
The announcement came at the end of the Monetary Policy Committee meeting in Abuja, where Governor Olayemi Cardoso addressed journalists on the committee’s resolutions.
Second cut in five months
The reduction from 27 per cent to 26.5 per cent follows an earlier cut in September 2025, when the rate was lowered from 27.5 per cent. Together, the moves signal a break from the aggressive tightening cycle that defined monetary policy over the past few years.
Before September’s adjustment, the last time the apex bank reduced rates was in 2020, when policymakers sought to cushion the economic shock triggered by the COVID-19 pandemic.
Since then, interest rates had steadily climbed as authorities battled persistent inflation, currency instability and external pressures.
This latest action suggests that the tide may be turning.
Inflation shows signs of cooling
Fresh data appear to have strengthened the committee’s resolve. According to the January 2026 Consumer Price Index report released by the National Bureau of Statistics (NBS), Nigeria’s headline inflation rate eased to 15.10 per cent, down slightly from 15.15 per cent recorded in December 2025.
While the drop is marginal, it reinforces a pattern of moderation that analysts say could create room for gradual policy easing.
Inflation remains elevated by historical standards, but the steady slowdown offers policymakers breathing space after years of tightening.
For businesses and households, easing inflation combined with lower benchmark rates could translate into improved access to credit over time.
What the decision means for banks and borrowers
The Monetary Policy Rate serves as a benchmark for lending across the banking system, influencing how commercial lenders such as Access Bank and United Bank for Africa price loans.
A lower MPR does not automatically mean cheaper loans overnight. However, it reduces funding costs for banks and can gradually feed into lower lending rates for businesses and consumers.
For companies seeking expansion capital and households managing debt, even a modest reduction can ease financial pressure, especially in an environment where borrowing costs have remained high for an extended period.
Key policy parameters retained
According to a BusinessDay report, despite the rate cut, the committee opted to keep other monetary settings unchanged.
The asymmetric corridor was maintained at +50/-450 basis points around the MPR. The Cash Reserve Ratio stayed at 45 per cent for Deposit Money Banks and 16 per cent for Merchant Banks, while the Liquidity Ratio was retained at 30 per cent.
By holding these parameters steady, policymakers signalled that while easing has begun, caution remains central to their strategy. The move reflects a balancing act between stimulating growth and maintaining price stability.
Market reaction and investor outlook
Financial market participants are already assessing the likely impact. Analysts at Coronation Merchant Bank said the decision could provide support for fixed-income assets.
In a note to investors, the firm indicated that further easing could lead to moderation in bond yields, potentially boosting the value of existing holdings.
For investors, a declining interest rate environment often increases the attractiveness of previously issued securities.
Still, much will depend on how inflation behaves in the coming months. A sustained downward trend could encourage additional cuts, while any resurgence in price pressures might prompt a pause.
A cautious turn toward growth
The latest decision underscores the Monetary Policy Committee’s growing belief that inflation risks are easing enough to justify modest support for economic expansion.
After years of tightening aimed at stabilising prices and the currency, policymakers appear ready to pivot carefully.
Even so, officials continue to emphasise that price stability remains their primary mandate.
The coming months will test whether the balance between growth and inflation control can be maintained as Nigeria navigates a delicate economic recovery path.
Source: Twitter
“This is the first time since the COVID-19 period that Nigerians will have an interest rate this low,” Osas Igho, a financial analyst, told Legit.ng.
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According to Igho, the recent rate cut is a breather for businesses, especially SMEs, who are burdened with cut-throat interest rates in the last six years.
Nigeria’s food fnflation hits 10-year low
Legit.ng earlier reported that Nigeria has recorded its lowest food inflation rate in a decade, offering long-awaited relief to millions of households battling high living costs.
According to the National Bureau of Statistics (NBS), food inflation fell sharply to 8.89% in January 2026, marking the first single-digit reading since May 2015, when it stood at 9.78%.
The new figure aligns with projections by analysts surveyed by BusinessDay, who had predicted a cooling in food prices ahead of the official data release.
Source: Legit.ng
