On February 24, 2026, the Central Bank of Nigeria (CBN) lowered its Monetary Policy Rate (MPR) by 50 basis points to 26.5 per cent following the 304th meeting of its Monetary Policy Committee (MPC) in Abuja. While the benchmark rate was trimmed, other policy parameters were left unchanged. The asymmetric corridor around the MPR was maintained at +50 and -450 basis points, and the Cash Reserve Ratio for deposit money banks remained at 45 per cent.
The decision reflects a cautious shift rather than a full easing cycle. Policymakers argue that inflationary pressures have continued to moderate, supported by the delayed impact of earlier monetary tightening, improved exchange rate stability, and better domestic food supply. However, they also acknowledged persistent risks, particularly from fiscal spending and potential election-related outlays that could reverse recent gains.
CBN Governor Olayemi Cardoso emphasized prudence during a post-meeting briefing, noting that the rate cut does not signal the end of inflation concerns. According to him, vigilance remains necessary despite encouraging data.
Recent figures from the National Bureau of Statistics (NBS) showed headline inflation easing slightly to 15.10 per cent in January 2026, down from 15.15 per cent in December 2025. Although modest, the decline marked the eleventh consecutive month of year-on-year disinflation and the lowest level since late 2020. The Consumer Price Index also fell during the period, reflecting easing price pressures.
A breakdown of the data reveals stronger improvements in food prices. Food inflation dropped to 8.89 per cent in January from 10.84 per cent a month earlier, reaching its lowest level in more than a decade. The MPC attributed the decline to improved agricultural output, exchange rate stability, and favorable base effects. Core inflation, which excludes volatile food and energy components, also moderated to 17.72 per cent from 18.63 per cent, partly due to softer price increases in communication services.
On a month-on-month basis, headline inflation recorded a negative 2.88 per cent in January, compared with a positive 0.54 per cent in December. This suggests that average prices declined during the month, though policymakers indicated that sustained improvement across subsequent readings would be necessary to confirm a durable trend.
Foreign exchange stability has played a central role in supporting disinflation. The CBN reported that gross external reserves climbed to $50.45 billion, providing nearly ten months of import cover for goods and services. Increased export receipts, stronger remittance inflows, and improved investor sentiment were cited as contributing factors. The MPC also pointed to favorable trade dynamics and a current account surplus as additional buffers strengthening macroeconomic stability.
Despite these gains, fiscal dynamics remain a concern. The committee warned that increased disbursements from the federation account and pre-election spending could inject liquidity into the system, potentially reigniting inflationary pressures. In such a scenario, the central bank may face difficult trade-offs between maintaining price stability and supporting economic growth.
Overall, the rate cut appears to be a measured adjustment testing room for flexibility rather than a decisive pivot toward aggressive monetary easing.
