Nigeria’s monetary authorities have initiated a moderate policy shift, trimming the benchmark interest rate amid sustained easing of inflationary pressures and improved external sector performance.
At the end of the 304th Monetary Policy Committee (MPC) meeting held in Abuja, Governor of the Central Bank of Nigeria, Olayemi Cardoso, announced a 50 basis-point reduction in the Monetary Policy Rate (MPR), bringing it down from 27 per cent to 26.5 per cent.
The MPC also retained the asymmetric corridor around the MPR at +50 to -450 basis points and left the Cash Reserve Ratio unchanged at 45 per cent for deposit money banks, 16 per cent for merchant banks, and 75 per cent for non-TSA public sector deposits.
Decision Anchored on Disinflation Trend
Cardoso explained that the committee’s decision followed a balanced assessment of risks, expressing confidence that the ongoing disinflationary trend would persist.
“The committee’s decision was premised on a balanced evaluation of risk to the outlook, which suggests that the ongoing disinflation trajectory would continue, largely supported by the transmission of previous monetary tightening, sustained exchange rate stability and enhanced food supply,” he said.
According to him, headline inflation in January 2026 marked the 11th consecutive month of year-on-year decline. The easing was attributed to the cumulative impact of earlier contractionary monetary measures, improved foreign exchange stability, robust capital inflows, and a stronger balance of payments position.
Relative stability in petroleum product prices and improved food supply, particularly staple items, further reinforced the downward inflation trend.
External Sector Strength and Fiscal Developments
The CBN governor highlighted what he described as remarkable improvements in Nigeria’s external sector, noting stronger foreign exchange reserves driven by higher export earnings and increased remittance inflows.
He welcomed the recently issued Presidential Executive Order 09, which redirects oil and gas revenues into the Federation Account, observing that it could enhance fiscal revenues and further bolster reserve accretion.
“These outcomes have indicated that prior tightening has continued to anchor expectations,” Cardoso stated, adding that the improved macroeconomic environment justified a moderate easing of policy.
Banking Sector Resilience and Recapitalisation
The MPC also reviewed developments in the financial system, noting continued resilience in the banking sector, with key financial soundness indicators remaining within regulatory thresholds.
Cardoso disclosed that 20 out of 33 banks that raised fresh capital have already met the new minimum capital requirements under the ongoing recapitalisation programme. In total, recapitalised banks have mobilised N4.05 trillion, with 71 per cent sourced domestically and 28.33 per cent from foreign investors.
He expressed optimism that the remaining banks would meet the requirements before the deadline and assured depositors that institutions under regulatory intervention remain under close supervision to safeguard customers’ funds and maintain industry stability.
Reserves at $50.4 Billion
Nigeria’s gross external reserves rose to $50.4 billion as of February 19, 2026 — the highest level in 13 years — sufficient to finance over nine months of imports, according to the apex bank.
Looking ahead, Cardoso projected continued macroeconomic stability and further moderation in inflation. However, he cautioned that increased spending associated with upcoming elections could pose risks to recent gains.
He urged fiscal authorities to maintain prudence, stressing that sustaining economic stability would require coordinated efforts across all arms of government.