Central Bank of Nigeria Cuts Interest Rate to 23 Percent

The Central Bank of Nigeria reduced its benchmark Monetary Policy Rate (MPR) by 350 basis points from 26.5 percent to 23 percent on September 22, 2026. Governor Olayemi Cardoso described the move as an operational reset and recalibration intended to align the policy rate with market conditions and strengthen monetary policy transmission, rather than a shift toward monetary easing.

The decision followed a period of moderating inflation. The National Bureau of Statistics reported that headline inflation fell to 15.39 percent in August and further declined to 14.63 percent in September, marking the fourth consecutive monthly decrease. This trend was largely driven by falling food prices, although energy inflation accelerated sharply to 5.38 percent in September. During the same period, Nigeria's gross external reserves rose to $55.25 billion, the highest level in 18 years.

Reactions from the private sector were mixed. While the Manufacturers Association of Nigeria and the Lagos Chamber of Commerce and Industry welcomed the cut, they warned that the benefits would only reach businesses if commercial banks lowered their lending rates. Segun Ajayi-Kadir of the Manufacturers Association of Nigeria argued that borrowing costs remain too high for global competitiveness, while Chinyere Almona noted that structural risks like energy costs and infrastructure gaps continue to limit credit access for SMEs. Other critics, including Lucky Amiwero, argued the rate remains too high to stimulate activity given the removal of subsidies.