The Monetary Policy Committee of the Central Bank of Nigeria has reduced the benchmark interest rate to 26.5 per cent, of which, members of the Organised Private Sector have described the move as minimal but a positive signal for businesses and the broader economy.

At the end of its 304th meeting in Abuja, the MPC cut the Monetary Policy Rate by 50 basis points from 27 per cent to 26.5 per cent.

All 11 members of the committee were in attendance.

The CBN Governor, Olayemi Cardoso, announced the decision on Tuesday.

“The committee decided to reduce the monetary policy rate by 50 basis points to 26.5 per cent,” Cardoso said.

He added that the MPC also resolved to “retain the Standing Facilities Corridor around the MPR at +50/-450 basis points” and to “retain the Cash Reserve Requirement for Deposit Money Banks at 45.00 per cent, Merchant Banks at 16.00 per cent, and 75.00 per cent for non-TSA public sector deposits.”

This latest move marks the second rate cut under the current leadership of the apex bank, following a similar 50-basis-point reduction in September 2025 and a hold at the November 2025 meeting.

Cardoso said the decision was based on “a balanced evaluation of risks to the outlook,” which indicates that “the ongoing disinflation trajectory would continue, largely supported by the lagged transmission of previous monetary tightening, sustained exchange rate stability, and enhanced food supply.”

He disclosed that headline inflation eased to 15.10 per cent in January 2026 from 15.15 per cent in December 2025, marking the eleventh consecutive month of year-on-year decline.

According to him, “Food inflation declined markedly to 8.89 per cent from 10.84 per cent,” while “core inflation declined to 17.72 per cent from 18.63 per cent.”

On a month-on-month basis, headline inflation fell to -2.88 per cent in January from 0.54 per cent in December, signalling what the committee described as “a continued softening of price pressures.”

The governor referenced the newly issued Presidential Executive Order 09, which redirects oil and gas revenues into the Federation Account.

The committee “welcomed” the order and “acknowledged the potential impact of this Order in improving fiscal revenue and accretion to reserves.”

He reaffirmed the MPC’s commitment to “an evidence-based policy framework, firmly anchored on the Bank’s core mandate of ensuring price stability, while safeguarding the soundness and resilience of the financial system.”

The next MPC meeting is scheduled for May 19 and 20, 2026.

Reacting to the decision, members of the Organised Private Sector described the 50-basis-point reduction as cautious but a welcome development.

In separate interviews with The PUNCH, private sector leaders said the cut, though modest, signalled a gradual shift toward supporting growth.

Director-General of the Nigeria Employers’ Consultative Association, Adewale Oyerinde, said the marginal cut indicated that monetary authorities were responding to sustained pressures facing businesses.

“The marginal reduction in the benchmark interest rate represents a cautious but noteworthy signal that monetary authorities are beginning to respond to the sustained pressures facing businesses and the productive sector,” Oyerinde said.

He added, “While the 50 basis point reduction may not immediately translate into significantly lower lending rates, it reflects a gradual shift toward supporting economic growth without undermining price stability.”

Oyerinde stressed that the overall policy stance remained tight due to the retention of the Cash Reserve Ratio at 45 per cent for commercial banks and other liquidity controls.

“With a substantial portion of bank deposits still sterilised, the capacity of financial institutions to expand credit to the real sector may remain constrained in the near term,” he remarked.

He noted that inflation, particularly in food, energy, and transportation, continued to pressure employers and households.

“For the modest easing in policy rate to have a meaningful impact, it must be complemented by coordinated fiscal and structural reforms that address supply-side constraints, improve infrastructure, and enhance productivity,” Oyerinde said.

National Vice President of the National Association of Small-Scale Industrialists, Segun Kuti-George, described the move as a conscious adjustment to preserve recent monetary gains.

“What this interest rate cut means to me is a conscious adjustment to prevent botching the country’s monetary achievements,” Kuti-George said. “With these reasonable adjustments, there will hopefully be relative stability.”

He added that there had been some improvement in inflation trends, stating, “Prices of consumable goods, particularly foods, have generally stayed below what it used to be in the corresponding time of last year. We hope that the trend will be maintained.”

On his part, Director of the Centre for the Promotion of Private Enterprise, Dr Muda Yusuf, described the rate cut as growth-supportive but warned that weak policy transmission and fiscal vulnerabilities could blunt its impact.

“This policy direction is appropriate and growth-supportive. It reflects improving macroeconomic fundamentals and reinforces confidence in the economy’s stabilisation trajectory,” Yusuf said.

He cautioned that lending rates might remain elevated due to structural constraints, stressing, “Unless these structural rigidities are addressed, the benefits of monetary easing may not fully translate into lower borrowing costs for manufacturers, SMEs, agriculture, and other productive sectors.”

Yusuf added that fiscal consolidation remained the missing anchor.

“Without fiscal consolidation, monetary easing could be undermined by continued fiscal pressures and crowding-out effects in the financial system,” he stated.

The Lagos Chamber of Commerce and Industry welcomed the rate cut as “cautious” and a signal of Nigeria’s shift to stabilisation and investment-led growth.

Director-General of the LCCI, Dr Chinyere Almona, said, “This move signals a significant shift from aggressive monetary tightening toward a stabilisation phase anchored on disinflation, exchange rate convergence, and improving supply-side conditions. It is a cautious, positive step in the right direction.”

The LCCI observed that, whereas the CBN’s decision to retain other monetary parameters suggests that liquidity conditions remain restrictive, the rate cut sends a critical confidence signal to the Organised Private Sector and establishes a pathway toward a gradual reduction in the cost of capital.

But Almona stressed that businesses still require tangible relief in financing costs to restore production, expand capacity, and preserve jobs.

She said, “For domestic and foreign investors, this decision reinforces Nigeria’s transition from reform-induced adjustment to stabilisation-driven expansion. Beyond this action, we expect to see improved policy predictability, strengthened real return expectations, and support for medium-term investment planning, particularly in manufacturing, agro-processing, local drug production, and export-oriented industries.”

Further, the LCCI urged a calibrated but sustained easing cycle anchored on inflation outcomes and real-sector performance, alongside accelerated reforms in power supply, transport logistics, agriculture, and the business regulatory environment.

“We expect the recently launched digital single window by the Nigerian Customs Service to ease transactions at the ports,” the LCCI DG stated.