BANKING and other financial lending institutions are expected to adjust their cost of funds for businesses as the Monetary Policy Committee (MPC) meeting of the Central Bank of Nigeria (CBN) cut interest rates to 26.5 per cent on Tuesday, February 24.
The CBN Governor, Olayemi Cardoso, announced the reduction at the end of the committee’s 304th meeting held in Abuja.
Cardoso disclosed that the committee decided to reduce the monetary policy rate by 50 basis points to 26.5 per cent, citing ease in inflation.
The move followed a 50-basis-point cut implemented in September 2025 and a hold at the previous MPC briefings in November 2025.
According to Cardoso, “The committee’s decision for rate cuts was premised on the balanced and ongoing disinflation and sustained exchange rate stability in the country.”
While the main interest rate was reduced, the CBN decided to maintain other safety measures to ensure the stability of the banking system.
Cardoso also informed that the Cash Reserve Requirement (CRR)-which is the amount of money banks must keep with the apex bank-was held at 45 per cent for regular commercial banks and 16 per cent for merchant banks.
The committee also adjusted the “Standing Facility Corridor,” which is the range of interest rates at which banks can borrow from or lend to the CBN. This range has now been set at +50 to-450 basis points around the new 26.5 per cent rate.
The apex bank governor also disclosed that 20 banks had met the recapitalisation requirements, adding that the recapitalisation would enhance the resilience and sustainable economic growth.
He stressed that food inflation recorded a single-digit inflation of 8.89 per cent in January, after over a decade of high staple food prices, adding that inflation easing to 15.10 per cent was a good development for the economy.
Cardoso further said that stability in the foreign exchange (FX) and domestic refining capacity, boosted by Dangote Petrochemical Refinery were other factors that supported macro-economic stability.
“Foreign exchange stability and domestic refining capacity improvement would support a favourable base effect on the economy and would support inflation decline.
The Chief Executive Officer of Economic Associates, Ayo Teriba, said interest rate cuts were largely driven by reforms in the currency market and clearing backlogs of foreign exchange owed by airlines and other companies, which made the reforms easier for enforcement.
“The rate cuts are a welcome development, and we expect the economy to progress and support more lending to small-scale businesses and industrialists for overall economic developments,” he added.
Harrison Edeh is a journalist with the International Centre for Investigative Reporting, always determined to drive advocacy for good governance through holding public officials and businesses accountable.