By IDNN Economy Desk
For the first time since 2020, the Central Bank of Nigeria (CBN) has cut its benchmark lending rate, lowering the Monetary Policy Rate (MPR) from 27.5% to 27%.
Governor Olayemi Cardoso said the decision followed five straight months of disinflation, with August inflation falling to 20.12% year-on-year from record highs in 2024. “The committee was satisfied with improving macro indicators and saw headroom to support growth,” Cardoso told journalists in Abuja.
Why the Cut Matters
Nigeria’s inflation, once at 28-year highs, has eased thanks to naira stabilisation and increased oil production. External reserves climbed past $42bn in September, their highest in six years. The CBN also reduced banks’ cash reserve requirements, while introducing new measures to strengthen interbank markets.
Analysts at Capital Economics project an aggressive easing cycle ahead, predicting up to 700 basis points of cuts by end-2026.
Implications for Borrowers and Economy
Lower rates may ease credit conditions for households and businesses, but risks remain. Excess liquidity in the banking system could reawaken inflation if not managed. The organised private sector has urged the CBN to ensure rate cuts translate into affordable lending for SMEs and manufacturers.
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