The Monetary Policy Committee (MPC) of the Central Bank of Nigeria has reduced the Monetary Policy Rate (MPR) by 50 basis points to 26.5 per cent, citing sustained disinflation and improved macroeconomic stability.
The decision was announced at the end of the Committee’s 304th meeting held on February 23 and 24, 2026, with all 11 members in attendance.
In addition to lowering the benchmark rate, the MPC retained the asymmetric corridor around the MPR at +50/-450 basis points.
It also left the Cash Reserve Requirement (CRR) unchanged at 45 per cent for Deposit Money Banks, 16 per cent for Merchant Banks, and 75 per cent for non-TSA public sector deposits.
Inflation Eases for 11th Consecutive Month
The Committee said its decision followed a balanced assessment of risks, noting that inflation has continued on a downward trajectory for the eleventh consecutive month.
Headline inflation eased slightly to 15.10 per cent in January 2026 from 15.15 per cent in December 2025.
Food inflation declined significantly to 8.89 per cent from 10.84 per cent, supported by improved domestic food supply, exchange rate stability and favourable base effects. Core inflation also moderated to 17.72 per cent from 18.63 per cent, driven largely by lower prices in Information and Communication services.
On a month-on-month basis, headline inflation fell to -2.88 per cent in January from 0.54 per cent in December, indicating a continued softening of price pressures.
The MPC attributed the sustained disinflation to the lagged effects of earlier monetary tightening, relative stability in the foreign exchange market, robust capital inflows, improved balance of payments position and stable petroleum product prices.
External Reserves Hit 13-Year High
The Committee highlighted the strong performance of Nigeria’s external sector, with gross external reserves rising to $50.45 billion as of February 16, 2026 — the highest level in 13 years. The reserves provide import cover of 9.68 months for goods and services.
The MPC noted that increased export earnings and remittance inflows have bolstered foreign exchange reserves, enhanced exchange rate stability and strengthened investor confidence.
Members also welcomed the recently issued Presidential Executive Order 09, which redirects oil and gas revenues into the Federation Account, noting its potential to improve fiscal revenues and further support reserve accretion.
Banking Sector Remains Resilient
The Committee reaffirmed the resilience of the banking sector, stating that key financial soundness indicators remain within regulatory thresholds.
It disclosed that of the 33 banks that have raised additional capital under the ongoing recapitalisation programme, 20 have met the new minimum capital requirements.
The MPC stressed the strategic importance of completing the exercise to reinforce financial system resilience and enhance the sector’s capacity to support sustainable economic growth.
Economic Activity Expands
Economic activity also showed signs of continued expansion, with the Purchasing Managers’ Index (PMI) rising to 55.7 points in January 2026, indicating growth in output and business activity, particularly in the fourth quarter of 2025.
Global and Domestic Outlook
Globally, the MPC noted that economic activity is projected to strengthen in 2026, supported by progress in trade negotiations, increased investment in artificial intelligence-related technologies and gradual monetary policy easing.
However, it warned of persistent risks, including rising protectionism, geo-economic fragmentation and potential trade disputes.
While global disinflation is expected to continue, inflation in many economies may remain above historical averages due to structural rigidities and uneven progress across countries.
Domestically, the MPC expressed confidence that the current disinflation trend will persist in the near term, supported by exchange rate stability, improved food supply and the lagged impact of previous tightening measures.
However, it cautioned that increased fiscal spending, including election-related expenditure, could pose upside risks to inflation.
The Governor of the Central Bank of Nigeria, Olayemi Cardoso, reiterated the Bank’s commitment to evidence-based policymaking anchored on price stability and financial system resilience.
The next MPC meeting is scheduled for May 19 and 20, 2026.
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