CBN Resets Monetary Policy Rate at 23%, Retains CRR
Oru Leonard
The Central Bank of Nigeria (CBN) has reset the Monetary Policy Rate (MPR) at 23 per cent and recalibrated the Standing Facilities Corridor as part of measures to strengthen monetary policy transmission.
The decision was taken at the 307th meeting of the Monetary Policy Committee (MPC), held on September 21 and 22, 2026, with 11 members in attendance.
In its Monetary Policy Communiqué No. 164, signed by CBN Governor, Olayemi Cardoso, on Tuesday, the Committee also retained the Cash Reserve Requirement (CRR) for Deposit Money Banks at 45 per cent, Merchant Banks at 16 per cent, and non-TSA public sector deposits at 75 per cent.
The MPC approved a new Standing Facilities Corridor of +50/-300 basis points around the MPR.
According to the Committee, the adjustment is an operational realignment designed to strengthen monetary policy transmission and restore the MPR as the principal signal of monetary policy.
It stressed that the corridor recalibration does not represent a change in the current monetary policy stance, but is intended to enhance the effectiveness of monetary policy and support Nigeria’s transition towards an inflation-targeting framework.
The MPC said the decision followed an observed divergence between the MPR and prevailing market rates, which it noted had weakened the effectiveness of monetary policy transmission.
The Committee also cited improvements in the CBN’s monetary policy implementation framework, including the adoption of the Nigeria Overnight Financing Rate (NOFR) as a transaction-based operational benchmark.
The MPC noted continued moderation in inflation, with headline inflation declining to 15.39 per cent in August 2026, from 15.43 per cent in July.
Food inflation fell to 19.57 per cent from 20.31 per cent, while core inflation declined to 13.29 per cent from 14.97 per cent during the same period.
The 12-month moving average headline inflation also fell to 16.30 per cent in August from 16.89 per cent in July, marking the 20th consecutive month of moderation.
Month-on-month headline inflation declined sharply to 0.71 per cent in August from 1.57 per cent in July.
The Committee attributed the moderation partly to lower food prices, exchange-rate stability and the impact of earlier monetary policy tightening.
It also welcomed the Presidential Initiative on the National Affordable CNG Transit Programme, which it said was expected to reduce transportation costs and contribute to easing inflationary pressures.
The MPC said Nigeria’s real Gross Domestic Product (GDP) expanded by 4.43 per cent in the second quarter of 2026, up from 3.89 per cent in the first quarter.
The non-oil sector grew by 4.31 per cent, driven by increased activities in information and communications technology, crop production, real estate, livestock, financial services and trade.
Oil-sector growth also accelerated to 7.31 per cent, compared with 2.57 per cent in the preceding quarter, supported by increased production and investment.
The composite Purchasing Managers’ Index (PMI) rose from 51.1 points in July to 52.7 points in August, indicating continued expansion in business activity.
The Committee further noted improvements in Nigeria’s external sector, including a balance of payments surplus of $3.51 billion in Q2 2026, compared with $2.38 billion in Q1.
The current account surplus also rose by 67.92 per cent, from $4.49 billion to $7.54 billion during the period.
The country’s gross external reserves stood at $55.25 billion as of September 18, 2026, which the MPC said was the highest level in 18 years and sufficient to finance approximately 11.3 months of imports of goods and services.
The MPC also acknowledged the signing of a Memorandum of Understanding on fiscal-monetary coordination between the Federal Government, represented by the Federal Ministry of Finance, and the CBN.
It said the agreement would provide a structured framework for improved policy coordination towards achieving low and stable inflation.
On the global economy, the Committee said global growth was projected at 3.0 per cent in 2026, compared with 3.5 per cent in 2025.
It identified the Middle East conflict, trade policy uncertainty and constrained fiscal space as major factors weighing on global growth.
The MPC also warned that global inflation risks remained tilted to the upside due to supply-chain disruptions, elevated crude oil and commodity prices, trade fragmentation and renewed geopolitical tensions.
For Nigeria, the Committee projected resilient output growth for the rest of 2026, supported by improved crude oil production, agriculture and other business activities.
It expects inflation to moderate further in the short to medium term, supported by foreign-exchange stability, the lagged effects of previous monetary tightening and improved food supplies during the harvest season.
However, it identified prolonged geopolitical tensions in the Middle East and election-related spending as potential upside risks to inflation.
The MPC said it would continue to evaluate the effectiveness of the recalibrated interest-rate corridor and ensure that future policy decisions remain data-dependent.
The next meeting of the Monetary Policy Committee is scheduled for November 23 and 24, 2026.
