CBN Cuts Interest Rate to 26.5%, Foreign Reserves Hit 13-Year High

Abuja, Nigeria – February 24, 2026

Nigeria’s apex bank has begun 2026 on a cautious but optimistic note, trimming its benchmark interest rate to 26.5 percent as inflation shows signs of easing and external buffers strengthen.
The decision, announced after the Monetary Policy Committee (MPC) meeting, reflects what policymakers described as a “careful recalibration” of monetary conditions. While the rate cut signals confidence in improving macroeconomic indicators, the Central Bank opted to keep other key policy tools — including the Cash Reserve Ratio (CRR) and liquidity ratio — unchanged.

Governor said the measured adjustment underscores the bank’s commitment to sustaining stability while supporting growth.
“Inflation is trending downward, the banking system remains resilient, and our external reserves have strengthened significantly,” Cardoso noted during the post-MPC briefing.

Inflation Moderates, Confidence Builds
After months of aggressive tightening aimed at curbing soaring prices and stabilizing the naira, inflation has begun to decelerate, offering room for a modest easing cycle. Analysts say the rate cut is intended to stimulate investment and ease borrowing costs without reigniting price pressures.

The MPC emphasized that holding the CRR and liquidity ratio steady would prevent excess liquidity from flooding the system, helping to maintain discipline in financial markets.
Foreign Reserves Reach 13-Year High
In a significant boost to investor confidence, Nigeria’s foreign reserves climbed to $50 billion — the highest level in 13 years.

The rebound in reserves has been attributed to improved oil earnings, increased diaspora remittances, and stronger capital inflows following foreign exchange reforms. The accumulation provides a buffer against external shocks and enhances the Central Bank’s ability to defend the naira if necessary.
Market observers view the reserves milestone as a critical signal that Nigeria’s external position is stabilizing after years of volatility.

Banking Sector Strengthens
Cardoso also highlighted the resilience of Nigeria’s banking sector, citing improved capital adequacy ratios and ongoing recapitalization efforts. According to the CBN, stronger bank balance sheets are better positioned to support credit expansion, particularly to productive sectors of the economy.

Financial analysts say the combination of moderating inflation, stronger reserves, and healthier banks creates a supportive environment for cautious monetary easing.
Pre-Election Spending Risks
Despite the positive indicators, the Central Bank struck a note of caution. With political activities expected to intensify ahead of upcoming elections, the MPC warned that excessive fiscal spending could reverse hard-won gains.
Uncontrolled liquidity injections tied to campaign-related expenditures, the bank cautioned, could stoke inflationary pressures and destabilize exchange rates.

“We will remain vigilant,” Cardoso said, emphasizing that monetary policy decisions would continue to be data-driven.

A Delicate Balance
The rate cut marks the first easing move of 2026 and signals confidence in Nigeria’s improving macroeconomic outlook. However, by maintaining other tightening measures, the CBN is clearly attempting to strike a delicate balance — supporting recovery while guarding against renewed instability.
For now, the message from Abuja is one of cautious optimism: progress has been made, buffers have strengthened, but discipline remains essential to sustain the gains.