CBN MPC cuts MPR to 23%

The Central Bank of Nigeria (CBN), Tuesday resolved to cut the Monetary Policy Rate (MPR) by 350 basis points (bps) to 23 per cent from 26.5 per cent

The central bank also recaliberated the Asymmetric Corridor at around the MPE +50/-300 bps.

Addressing journalists at the end of the two-day meeting of the Monetary Policy Committee (MPC) in Abuja, CBN Governor, Mr. Olayemi Cardoso, said the committee also decided to retain the Cash Reserve Ratio (CRR) at 45 per cent for Deposit Money Banks (DMBs) and 16 per cent for Merchant Banks.

Announcing the MPC decisions after the two-day meeting in Abuja, Cardoso also announced a recalibration of the standing facilities corridor to +50/-300 basis points around the MPR.

This puts the transaction corridor at between 20 per cent and 22.5 per cent. It had risen to nearly 30 per cent at the height of the recent tightening.

The apex bank retained 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 (TSA) public-sector deposits.

The combination of a substantially lower policy rate with unchanged reserve requirements suggests that the CBN is attempting to reduce the cost of credit without completely abandoning its control over system liquidity.

Cardoso described the move as an operational reset rather than a shift towards monetary easing.

Cardoso, who is also the Chairman of the Monetary Policy Committee (MPC), said the objective was to strengthen monetary-policy transmission and restore the MPR as the principal signal of monetary policy after the divergence between the policy rate and market rates had weakened transmission.

That distinction could prove particularly important for manufacturers, who see the cost of borrowing as only one component of a broader cost crisis involving energy, logistics, imported raw materials, FX challenges and multiple taxation.

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Cardoso also defended his performance, saying his team had moved the economy away from a period of severe monetary and foreign-exchange distortions.

He pointed to the restoration of the CBN’s core mandate, the removal of multiple exchange-rate distortions, the rebuilding of external reserves, banking sector recapitalisation and increased diaspora remittances as major milestones of the administration.

Cardoso said the starting point for his administration was an economy in which confidence in the currency and the central bank had deteriorated sharply.

He recalled a period of rapid naira depreciation, multiple exchange rates and widespread uncertainty over prices, saying the instability encouraged people to move their savings into foreign currency and contributed to a loss of confidence in the domestic financial system.

He also pointed to the scale of the CBN’s Ways and Means exposure at the time, putting it at about N23.7 trillion, alongside more than N10 trillion in interventions.

According to him, the accumulation of liquidity through these channels contributed to the inflationary pressures confronting the economy.

The subsequent policy response, he said, was to return the central bank to its statutory mandate of maintaining price and financial stability.

Cardoso argued that the former multiple-rate regime created substantial distortions because access to foreign currency depended on the window available to an individual or business.

He revealed that gross external reserves stood at $55.25 billion on September 18, 2026, representing the highest level in 18 years and equivalent to about 11.3 months of import cover.

The governor attributed the improvement to consistency and discipline in policy, while also drawing particular atte

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