Economic Pivot: CBN Lowers Monetary Policy Rate to 26.50%

In a surprising move aimed at stimulating economic growth, the Central Bank of Nigeria (CBN) has announced a reduction in the Monetary Policy Rate (MPR) from 27.25% to 26.50%. This decision was made following the conclusion of the first Monetary Policy Committee (MPC) meeting of 2026 on Tuesday, February 24. The 75-basis-point cut marks a significant shift in the bank's strategy, moving away from the aggressive tightening cycle that defined much of the previous year as the bank sought to combat soaring inflation.

The CBN Governor, Olayemi Cardoso, explained that while inflation remains a concern, recent data suggests a "marginal stabilization" in price levels, providing the committee with the room to provide much-needed relief to the productive sectors of the economy. By lowering the cost of borrowing, the CBN hopes to encourage investment in manufacturing, agriculture, and small-scale enterprises. The Governor noted that the committee weighed the risks of persistent inflation against the necessity of preventing a prolonged economic slowdown, ultimately choosing a "cautious easing" approach.

Despite the cut in the MPR, the CBN maintained other parameters, including the Cash Reserve Ratio (CRR), to ensure that liquidity in the banking system remains within manageable limits.

The news has already begun to impact the Nigerian Exchange (NGX), with investors showing renewed interest in stocks as they anticipate cheaper credit and improved corporate earnings. For the average Nigerian, the impact of this policy shift may take time to trickle down into lower prices for goods and services or more accessible personal loans. As the government continues to navigate the complexities of the national economy, this latest move by the CBN will be closely monitored to see if it delivers the promised growth without sacrificing price stability.

Do you think this rate cut is the right move to jumpstart the economy, or is it too early to stop the fight against inflation? Share your comments below!

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