The Monetary Policy Committee (MPC) of the Central Bank of Nigeria has reduced the Monetary Policy Rate (MPR) by 50 basis points to 26.5 per cent, following sustained improvements in key macroeconomic indicators and continued moderation in inflation.
Briefing newsmen at the end of the 304th meeting of the Committee held on tuesday in Abuja with all eleven members in attendance, the governor of Central Bank of Nigeria, CBN, Olayemi Cardoso said the MPC retained the asymmetric corridor around the MPR at +50/-450 basis points. It also left the Cash Reserve Requirement (CRR) unchanged at 45.00 per cent for Deposit Money Banks, 16.00 per cent for Merchant Banks, and 75.00 per cent for non-TSA public sector deposits.
On disinflation, the Committee’s decision was anchored on sustained disinflationary trends in the economy.
According to the MPC, 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 decline.
The committee observed that food inflation dropped significantly to 8.89 per cent from 10.84 per cent, supported by improved domestic food supply, exchange rate stability, and favourable base effects.
It adds that core inflation also moderated to 17.72 per cent from 18.63 per cent, largely due to declining prices in Information and Communication services.
On a month-on-month basis, headline inflation fell sharply to -2.88 per cent in January, compared to 0.54 per cent in December, indicating continued easing of price pressures.
The MPC noted that the downward trend reflects the lagged impact of earlier monetary tightening, improved balance of payments position, relative stability in petroleum product prices, and enhanced foreign exchange market stability.
The Committee highlighted the robust performance of Nigeria’s external sector, with gross external reserves rising to US$50.45 billion as of February 16, 2026 — the highest level in 13 years. The reserves now provide an import cover of 9.68 months for goods and services.
The MPC attributed the strong reserve position to higher export earnings and increased remittance inflows, which have bolstered investor confidence and strengthened exchange rate stability.
Members also welcomed the newly issued Presidential Executive Order 09, which redirects oil and gas revenues into the Federation Account.
The Committee noted that the policy could further enhance fiscal revenue and boost reserve accretion.
Banking Sector Remains Resilient
The MPC acknowledged the resilience of the banking sector, with key financial soundness indicators remaining within regulatory thresholds.
On the ongoing recapitalization programme, the Committee disclosed that out of 33 banks that have raised additional capital, 20 have met the new minimum capital requirement.
The MPC reiterated the strategic importance of completing the recapitalization exercise to strengthen financial system resilience and improve the sector’s capacity to support sustainable economic growth.
In terms of output, the Purchasing Managers’ Index (PMI) stood at 55.7 points in January 2026, signalling continued expansion in economic activities and likely improvement in fourth-quarter 2025 output.
The MPC noted that Global Outlook and Risks
Globally, economic activities are projected to strengthen in 2026, supported by progress in trade negotiations, increased investment in artificial intelligence-related technologies, and gradual monetary policy easing.
The MPC posited that global disinflation is expected to continue, near-term inflation may remain above historical averages due to structural rigidities and uneven pace of price moderation across economies.
The committee expressed optimism that domestic disinflation would persist in the near term, supported by sustained exchange rate stability, improved food supply, and the continued impact of previous policy tightening.
The Committee, therefore, cautioned that increased fiscal releases, including election-related spending, could pose upside risks to inflation.
Reaffirming its commitment to price stability and financial system soundness, the MPC emphasized that its decisions remain firmly anchored on evidence-based policy assessment aimed at sustaining macroeconomic stability and supporting long-term growth.