The Central Bank of Nigeria (CBN) has reduced its benchmark interest rate from 26.5 per cent to 23 per cent, triggering different reactions from economists, business operators and capital market experts over what the move could mean for the Nigerian economy.
The 350-basis-point reduction was announced by CBN Governor Olayemi Cardoso after the 307th meeting of the Monetary Policy Committee (MPC) in Abuja. The apex bank described the move as a reset and recalibration of its monetary policy framework rather than a change in its overall policy stance.
The committee also adjusted the standing facilities corridor to +50/-300 basis points around the MPR, while retaining the Cash Reserve Requirement at 45 per cent for Deposit Money Banks, 16 per cent for Merchant Banks and 75 per cent for non-Treasury Single Account public sector deposits.
Cardoso explained that the previous MPR had become increasingly disconnected from actual market rates, weakening the transmission of monetary policy to businesses and other parts of the economy.
According to the CBN, resetting the rate closer to prevailing market conditions is expected to strengthen the MPR’s role as the main signal for monetary policy.
The governor said the decision was supported by improving macroeconomic conditions, including moderating inflation, greater foreign-exchange stability and stronger external reserves.
Cardoso said the CBN’s previous tightening measures had helped strengthen the economy and improve investor confidence.
He also disclosed that Nigeria’s gross external reserves stood at $55.25 billion as of September 18, 2026, which he said was enough to cover about 11.3 months of imports.
The rate reduction has, however, produced different reactions among economic stakeholders.
Dr Muda Yusuf, Chief Executive Officer of the Centre for the Promotion of Private Enterprise (CPPE), described the decision as a timely reset and a significant relief for the real sector.
He said the previous high-interest-rate environment had made it difficult for businesses to obtain affordable financing for investment, production and working capital.
Yusuf said the new rate could reduce the cost of capital, improve business cash flows and encourage investment, particularly in manufacturing, agriculture, construction and logistics.
He also pointed to the gap between the previous 26.5 per cent MPR, inflation of about 15.4 per cent and prevailing money-market rates of around 20 per cent as evidence that the policy rate had become misaligned with market conditions.
“The reduction of the MPR to 23% should, therefore, be viewed not merely as monetary easing, but as an important realignment of the policy rate with prevailing macroeconomic and financial-market conditions.”
Professor Uche Uwaleke, President of the Capital Market Academics of Nigeria, also welcomed the decision.
“The MPC decision to cut the MPR by 350 basis points is justified by moderating inflation, exchange rate stability, improvement in FX market liquidity, and accretion to external reserves.”
He described the decision as a welcome development, particularly following the recent agreement between the Ministry of Finance and the CBN on closer fiscal and monetary policy coordination.
However, Lucky Amiwero, President of the National Council of Managing Directors of Licensed Customs Agents (NCMDLCA), said the new rate was still too high to provide sufficient relief for businesses.
“It is still high. When you look at the economy, they have removed subsidies and they have removed the floating currency. What is the bargaining power of anybody today? We go to the Central Bank; we go to any bank to borrow money. You cannot survive.”
Amiwero argued that businesses continue to face high borrowing costs alongside infrastructure challenges such as unreliable electricity and poor roads.
Fiona Ahimie, President of the Chartered Institute of Stockbrokers (CIS), viewed the rate reset from the perspective of the capital market.
She said the lower rate could lead to changes in how investors allocate their money, particularly as returns on Treasury bills and other short-term instruments decline.
Ahimie said investors could begin looking towards longer-term bonds and equities for better returns, while lower financing costs could also support companies with strong earnings and borrowing needs.
She cautioned, however, that the effect would differ across sectors. Banks, for example, could experience both increased demand for loans and pressure on their interest margins depending on how quickly lending and deposit rates adjust.
Dr Ubah Jeremiah, Chief Investment Officer of VNL Capital Asset Management, described the 350-basis-point reduction as an unexpected move and a strong indication of the CBN’s confidence in recent improvements in inflation, exchange-rate stability and foreign reserves.
He said the decision represented what he described as an “aggressive attack on Nigeria’s economic misery.”
The CBN has maintained that the adjustment should not be interpreted as a complete shift towards an accommodative monetary policy. Instead, it says the move is an operational realignment designed to improve how monetary policy decisions affect the wider economy.
For businesses and consumers, the key question now is whether the lower policy rate will eventually translate into cheaper bank loans and improved access to credit. Analysts have also pointed to possible effects on investment, government borrowing costs, foreign capital flows and the exchange-rate market.
