CBN Cuts MPR to 23% as Experts Split Over Impact

The Central Bank of Nigeria has cut the Monetary Policy Rate from 26.5 per cent to 23 per cent, a three percentage point reduction announced by Governor Olayemi Cardoso at the end of the 307th Monetary Policy Committee meeting in Abuja. Cardoso called the decision a reset to meet current financial market realities, but reactions came in mixed, with some operators saying the new rate is still too high to lift businesses.

What the MPC Changed

The committee recalibrated the standing facilities corridor to +50 and -300 basis points around the MPR. It retained the Cash Reserves Requirement at 45 per cent for Deposit Money Banks, 16 per cent for Merchant Banks and 75 per cent for Non-TSA public sector deposits.

Cardoso said the move should be seen as an operational realignment aimed at strengthening monetary policy transmission and forcing the primacy of the monetary rate. He stressed it does not amount to a change in the current monetary policy stance, but an operational reset to support the transition to an inflation targeting framework.

"Members noted that the bank's ongoing repair of the monetary policy implementation framework, including the adoption of NOFA as a transaction-based operational benchmark, has improved the transparency of money market operations," he said. The committee observed that the divergence between the MPR and prevailing market rates had weakened policy transmission.

Cardoso: No Better Time Than Now

The governor said the tightening of the past had worked, pointing to receding foreign exchange pressure, capital market growth tied to FX stability and returning investor confidence.

"We are in a position of stability. We have nothing to fear. This is a reset and a recalibration. No better time to do it than now when things are stable," he said.

He put the Gross External Reserves at $55.25 billion as of September 18, 2026, the highest in 18 years, enough to finance approximately 11.3 months of import of goods and services. Cardoso, who clocked three years in office, said that before his assumption of office the country was subsidising fuel up to 2 per cent of GDP while the exchange rate subsidy was as high as 3 per cent of GDP, a combined 5 per cent the economy could not accommodate.

Experts Divided

Dr Muda Yusuf, Chief Executive Officer of the Centre for the Promotion of Private Enterprise, called the 350 basis point reduction a timely reset and a major relief for the real sector. He noted the widening misalignment between the MPR of 26.5 per cent, inflation of about 15.4 per cent and money market rates of around 20 per cent, which he said weakened the signalling function of the policy rate.

Fiona Ahimie, President of the Chartered Institute of Stockbrokers, said the reset to 23 per cent is a significant development for the capital market and could mark the beginning of a new phase of asset repricing.

Professor Uche Uwaleke, President of the Capital Market Academics of Nigeria, said the cut is justified by moderating inflation, exchange rate stability, improvement in FX market liquidity and accretion to external reserves. He also welcomed it against the backdrop of the recently signed MoU between the Minister of Finance and the CBN governor on fiscal and monetary policy collaboration.

Not everyone is convinced. Mr Lucky Amiwero, National President of the National Council of Managing Directors of Licensed Customs Agents, described the rate cut as insufficient to stimulate businesses and economic activities.

What It Means

For Nigerian businesses, the direction of borrowing costs has changed for the first time in this tightening cycle, but at 23 per cent the MPR remains far above the level many operators say they need to fund expansion. The argument now shifts to how quickly banks pass the cut through to lending rates.