CBN Reduces Interest Rate To 23%

The Central Bank of Nigeria (CBN) has reduced its Monetary Policy Rate (MPR) from 26.5 per cent to 23 per cent, cutting the benchmark interest rate by 350 basis points at the September 2026 Monetary Policy Committee (MPC) meeting.

The decision was taken at the committee’s 307th meeting on Tuesday.

It represents a significant change in the CBN’s monetary policy stance after the MPR was retained at 26.5 per cent at the MPC’s July meeting.

POLITICS NIGERIA reports that the latest rate cut comes amid continued moderation in Nigeria’s inflation rate and relative stability in the foreign exchange market, with the apex bank adjusting its key policy rate as price pressures show signs of easing.

The MPC also recalibrated the Standing Facilities Corridor to +50 and -300 basis points around the new MPR of 23 per cent.

The committee, however, retained the Cash Reserve Requirement (CRR) at 45 per cent for Deposit Money Banks, 16 per cent for Merchant Banks and 75 per cent for non-TSA public sector deposits.

The decision followed the latest inflation figures released by the National Bureau of Statistics (NBS), which showed that headline inflation eased marginally in August.

Nigeria’s headline inflation fell from 15.43 per cent in July to 15.39 per cent in August 2026, according to the NBS Consumer Price Index report.

The August figure represents a 0.04 percentage-point decline from the previous month and is substantially lower than the 23.14 per cent recorded in August 2025.

The statistics agency also reported a significant slowdown in the monthly pace of price increases. Headline inflation on a month-on-month basis dropped to 0.71 per cent in August from 1.57 per cent in July.

According to the NBS, the Consumer Price Index rose from 145.3 points in July to 146.3 points in August, indicating that the general price level continued to increase during the month.

However, the slower month-on-month inflation rate means that prices increased at a considerably slower pace than they did in July.

For the 12 months ending in August 2026, the average CPI increased by 16.30 per cent, representing a 12.02 percentage-point decline from the 28.32 per cent 12-month average inflation rate recorded in August 2025.

The moderation was also reflected in urban inflation. The year-on-year urban inflation rate declined from 16.12 per cent in July to 15.88 per cent in August, while urban month-on-month inflation dropped sharply from 1.90 per cent to 0.28 per cent.

The average urban inflation rate for the 12 months ending August 2026 stood at 16.28 per cent, compared with 29.73 per cent recorded during the corresponding period of the previous year.

Rural inflation, however, recorded a different movement during the month. The year-on-year rural inflation rate rose to 14.23 per cent in August, while the month-on-month rate increased to 1.79 per cent from 0.78 per cent in July.

Despite the monthly increase in rural inflation, the average rural inflation rate for the 12 months ending August stood at 16.02 per cent, down from 26.47 per cent a year earlier.

Food inflation also recorded a notable slowdown in August. The rate fell to 19.57 per cent year-on-year, compared with 25.30 per cent in August 2025.

On a month-on-month basis, food inflation dropped sharply from 5.56 per cent in July to 1.02 per cent in August.

The NBS attributed movements in food prices to changes in the costs of commodities including palm oil, carrots, pepper, onions, cassava flour, beef, yam flour, water yam, melon, fresh ginger, fresh fish, Irish potatoes, wheat grain, frozen chicken and turkey meat.

The bureau, however, stressed that food prices still increased during August, although the pace of increase was considerably slower than in the preceding month.

The latest inflation figures continued a downward trend recorded in recent months. Headline inflation had declined from 15.91 per cent in June to 15.43 per cent in July before easing further to 15.39 per cent in August.

Food inflation had moved in the opposite direction in July, rising to 20.31 per cent from 17.52 per cent in June, before recording a sharp decline in August.

The August inflation figures also showed that price pressures remained uneven across the country. Earlier data showed significant differences in inflation rates among states, with Adamawa recording the highest year-on-year headline inflation at 33.03 per cent, followed by Yobe at 25.21 per cent and Anambra at 23.99 per cent.

The MPR serves as the CBN’s benchmark policy rate and influences borrowing and lending conditions within the financial system.