The Monetary Policy Committee has trimmed Nigeria’s benchmark interest rate, the Monetary Policy Rate from 27 per cent to 26.5 per cent in a bid to reduce financial strain on businesses and households.
The decision was unveiled on Tuesday by the Governor of the Central Bank of Nigeria, Mr. Olayemi Cardoso, at the end of the committee’s 304th meeting.
The 50 basis points reduction marks the second rate cut within five months, signalling a gradual shift towards easing lending conditions after an extended cycle of aggressive monetary tightening.
With the latest adjustment, the apex bank aims to lower borrowing costs modestly while maintaining macroeconomic stability.
According to the committee, the move followed signs that efforts to rein in inflation and ease the high cost of living are beginning to yield results.
Members observed that the impact of earlier restrictive measures is becoming more evident, while the naira has shown improved stability in the foreign exchange market.
“The Committee’s decision was based on a balanced evaluation of risks to the outlook, which suggests that the ongoing disinflation path will continue,” the CBN governor stated.
Despite lowering the benchmark rate, the bank retained key prudential parameters to safeguard the financial system. The Cash Reserve Requirement remains at 45 per cent for commercial banks and 16 per cent for merchant banks.
The MPC also reviewed the Standing Facility Corridor, adjusting it to +50 and -450 basis points around the new 26.5 per cent benchmark rate.
The corridor defines the margin within which banks can borrow from or deposit funds with the apex bank.
Cardoso further revealed that 20 banks have successfully met the recapitalisation thresholds set by the regulator, commending the resilience and stability of the country’s banking sector.
The Central Bank expressed optimism that sustained exchange rate stability and improved food supply to markets would reinforce the current recovery trajectory.
It maintained that the policy mix seeks to strike a delicate balance, curbing inflationary pressures while ensuring businesses have access to affordable credit to expand operations and generate employment.
