Central Bank of Nigeria Cuts Interest Rate to 23 Percent

The Central Bank of Nigeria reduced its Monetary Policy Rate (MPR) from 26.5 percent to 23 percent on September 22, 2026, following a two-day meeting of its Monetary Policy Committee in Abuja. The 350-basis-point cut surprised economists who had expected rates to remain unchanged. Governor Olayemi Cardoso characterized the move as an "operational reset" and "recalibration" rather than a shift toward monetary easing, aiming to repair the transmission mechanism between policy decisions and market rates.

The decision follows improving macroeconomic indicators, including a decline in headline inflation to 15.39 percent in August and an increase in gross external reserves to over $55 billion. Along with the rate cut, the bank recalibrated the Standing Facilities Corridor to +50 and -300 basis points around the new MPR, though it maintained the Cash Reserve Requirement for deposit money banks at 45 percent.

Leaders of the Organised Private Sector welcomed the adjustment as a way to ease financing pressures for manufacturers and small businesses. However, representatives from the Lagos Chamber of Commerce and Industry and the Association of Small Business Owners of Nigeria warned that the cut would only be effective if commercial banks transparently lowered lending rates for borrowers. Analysts also noted potential risks of portfolio-flow reversals as the yield gap between Nigeria and the United States narrows.