MPC Lowers MPR By 50bps To 26.50%
The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) reduced the Monetary Policy Rate (MPR) by 50bps to 26.50% (previous: 27.0%), citing sustained disinflation, naira appreciation, and an improved external position.
However, the Committee retained the Standing Facility Corridor at +50bps/-450bps, while leaving the Cash Reserve Requirement unchanged at 45.0% for Deposit Money Banks, 16.0% for Merchant Banks, and 75.0% for non-TSA public sector deposits. The liquidity ratio was also maintained at 30.0%.
On domestic growth, the committee noted that the economy continues to expand, underpinned by resilient private sector activity, as evidenced by the CBN’s Purchasing Managers’ Index (PMI).
Although the Composite PMI moderated to 55.70 points in January (December: 57.60 points), it remains well above the 50-point expansion threshold, signalling sustained growth momentum and a favourable outlook for output in Q4-25 and Q1-26.
On inflation, the MPC highlighted sustained moderation in inflation pressures, as evidenced by the continued deceleration in headline inflation (January 2026: 16.05% y/y vs December 2025: 15.15% y/y).
This has been underpinned by the lagged effect of monetary policy tightening, naira appreciation, improved agricultural output, and steady fuel prices.
On the external sector, the Committee underscored the sustained improvement in Nigeria’s external position, evidenced by a balance of payments surplus and rising external reserves, which have collectively reinforced exchange rate stability.
It also welcomed the Federal Government’s Executive Order mandating the direct remittance of oil revenue to the Federation Account, a measure expected to strengthen fiscal revenues and further support reserve accretion.
According to the CBN, gross external reserves stood at USD50.45 billion as of 16 February the highest level in 13 years providing import cover of approximately 9.7 months.
On global developments, the committee noted that global growth is projected to strengthen over the near to medium term, supported by progress in trade negotiations, increased investment in AI-related technologies, and the gradual easing of monetary policy across major economies.
However, it cautioned that significant headwinds persist and could weigh on the outlook. These include rising protectionism, deepening geo-economic fragmentation, and the potential escalation of trade disputes, all of which pose downside risks to global growth.
On inflation, the Committee expects the global disinflation process to extend into 2026, driven by the lagged effects of prior monetary tightening and ongoing improvements in supply chain conditions.
Nonetheless, inflation is likely to remain above historical norms in the near term, reflecting structural rigidities and uneven disinflation dynamics across economies.