The Central Bank of Nigeria (CBN) has reset the Monetary Policy Rate (MPR) to 23 percent as it moves to realign its policy framework with prevailing market rates and strengthen the transmission of monetary policy across the financial system.
The decision was taken at the 307th meeting of the Monetary Policy Committee (MPC), held on September 21 and 22, 2026, with 11 members in attendance.
Alongside the new 23 percent benchmark rate, the MPC recalibrated the Standing Facilities Corridor to +50/-300 basis points around the MPR.
The Committee retained the Cash Reserve Requirement at 45 percent for deposit money banks and 16 percent for merchant banks, while the CRR on non-TSA public-sector deposits remained at 75 percent.
However, the CBN stressed that resetting the MPR to 23 percent should not be interpreted simply as a change in the direction of monetary policy.
According to the MPC, the decision represents an operational realignment intended to strengthen monetary-policy transmission and restore the MPR’s position as the principal signal of monetary policy.
The Committee said a growing divergence between the benchmark MPR and prevailing market interest rates had weakened the effectiveness of monetary-policy transmission.
As a result, it considered it necessary to bring the implementation framework more closely in line with market conditions.
The CBN said improvements to its monetary-policy implementation framework, including the adoption of the Nigerian Overnight Reference Rate (NOFR) as a transaction-based operational benchmark, had already improved transparency in the money market.
The latest recalibration is expected to build on those changes and support Nigeria’s transition towards an inflation-targeting framework.
Improving Macroeconomic Conditions Give CBN Room to Reset Rate
The MPC said improving macroeconomic conditions provided sufficient headroom to undertake the interest-rate and corridor recalibration without undermining Nigeria’s disinflation process.
Headline inflation slowed to 15.39 percent in August 2026 from 15.43 percent in July, extending the recent moderation in consumer prices.
Food inflation declined more significantly to 19.57 percent from 20.31 percent, while core inflation moderated to 13.29 percent from 14.97 percent.
Month-on-month headline inflation also slowed to 0.71 percent in August from 1.57 percent previously.
The 12-month moving average headline inflation rate declined to 16.30 percent from 16.89 percent, marking what the MPC described as 20 consecutive months of moderation.
The Committee attributed the improving inflation environment partly to earlier monetary tightening, exchange-rate stability and improved inflation expectations.
Nigeria’s external position also strengthened ahead of the MPC decision.
Gross external reserves reached $55.25 billion as of September 18, 2026, which the CBN described as the highest level in 18 years and sufficient to finance approximately 11.3 months of imports of goods and services.
The country’s current-account surplus increased 67.92 percent to $7.54 billion in the second quarter, from $4.49 billion in the first quarter.
The balance-of-payments surplus also improved to $3.51 billion from $2.38 billion over the same period.
Nigerian Economy Expands 4.43%
Economic growth provided additional support for the MPC’s decision.
Nigeria’s real Gross Domestic Product expanded 4.43 percent in the second quarter of 2026, accelerating from 3.89 percent in the preceding quarter.
Non-oil economic activity grew 4.31 percent, compared with 3.94 percent in the first quarter, supported by increased activity in information and communications technology, crop production, real estate, livestock, financial services and trade.
Oil-sector growth accelerated substantially to 7.31 percent from 2.57 percent, supported by increased production and investment.
The Composite Purchasing Managers’ Index also climbed to 52.7 points in August from 51.1 in July, signalling continued expansion in business activity.
The MPC said the combination of moderating inflation, stronger external reserves, improved external-sector fundamentals and economic growth created an appropriate environment for recalibrating the monetary-policy framework.
The Committee expects inflation to moderate further in the short to medium term, supported by foreign-exchange stability, the delayed effects of previous monetary tightening and improved food supply during the harvest season.
However, the CBN warned that prolonged geopolitical tensions in the Middle East and election-related spending could create renewed upward pressure on prices.
The MPC said it would continue evaluating the effectiveness of the recalibrated interest-rate corridor and maintain a data-dependent approach to future monetary-policy decisions.
The next MPC meeting is scheduled for November 23 and 24, 2026.
