Central Bank of Nigeria cuts interest rates by 350 basis points to 23%

The Central Bank of Nigeria cut its benchmark interest rate by 350 basis points to 23%. The reduction marks the first rate cut since before the Iran conflict escalated, and the sheer size of it signals that the tightening cycle is over.

The CBN had spent much of the prior two years in aggressive tightening mode, pushing the Monetary Policy Rate as high as 27.5% to combat inflation that had spiraled above 27% in early 2025.

The shift began modestly. In September 2025, the CBN trimmed the MPR by 50 basis points to 27%. Another 50 basis point cut followed in February 2026, bringing the rate to 26.5%. This latest cut of 350 basis points to 23% represents a dramatic acceleration of the easing cycle.

Inflation in Nigeria fell from 27.61% in January 2025 to roughly 15.1% by January 2026, nearly halving in the span of twelve months. CBN Governor Olayemi Cardoso has previously cited disinflation trends and stable exchange rates as the key factors supporting easier monetary policy.

Notably, the CBN retained the Cash Reserve Ratio at 45% for deposit money banks and kept the elevated 75% CRR on certain public-sector deposits.

Analysts had been broadly optimistic about additional easing in 2026, but most were forecasting incremental 50 to 100 basis point moves, not a 350 basis point plunge.

At roughly 15%, Nigeria’s inflation rate has come down substantially but remains well above the CBN’s medium-term targets. At 23%, the MPR still sits comfortably above current inflation, preserving a positive real rate buffer. But the margin has narrowed considerably.

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