The Central Bank of Nigeria’s decision to cut its Monetary Policy Rate, MPR, from 26.5 per cent to 23 per cent has generated different reactions from business and financial-sector stakeholders.
The 350-basis-point reduction was announced by CBN Governor, Olayemi Cardoso, following the 307th meeting of the Monetary Policy Committee, MPC, in Abuja.
Cardoso described the decision as a reset of the monetary policy framework to reflect current financial-market conditions.
The National President of the National Council of Managing Directors of Licensed Customs Agents, NCMDLCA, Lucky Amiwero, however, said the new rate remained too high to provide sufficient relief for businesses.
In contrast, the Chief Executive Officer of the Centre for the Promotion of Private Enterprise, CPPE, Dr Muda Yusuf, described the reduction as timely and a major relief for the real sector.
The President of the Chartered Institute of Stockbrokers, CIS, Fiona Ahimie, said the move represented a significant development for the capital market and could usher in a new phase of asset repricing.
Similarly, the President of the Capital Market Academics of Nigeria, Professor Uche Uwaleke, said the reduction was supported by moderating inflation, exchange-rate stability, improved foreign-exchange liquidity and increased external reserves.
He also linked the decision to the recently signed Memorandum of Understanding between the Minister of Finance and the CBN Governor on fiscal and monetary policy collaboration.
CBN recalibrates monetary policy framework
At the MPC meeting, Cardoso announced that the CBN would reset its standing facilities corridor to plus 50 and minus 300 basis points around the MPR.
The Cash Reserve Requirement, CRR, was retained at 45 per cent for Deposit Money Banks, 16 per cent for Merchant Banks and 75 per cent for Non-TSA public sector deposits.
According to Cardoso, the adjustment is intended to improve the transmission of monetary policy and restore the MPR as the main signal of the central bank’s policy direction.
The governor stressed that the move does not represent a change in the underlying monetary policy stance, describing it instead as an operational adjustment.
He said the decision followed concerns that the difference between the MPR and prevailing market rates had weakened monetary policy transmission.
Cardoso also pointed to the CBN’s ongoing reforms to its monetary policy implementation framework, including the adoption of NOFA as a transaction-based operational benchmark.
He said the prevailing economic conditions provided room for the recalibration without undermining the process of reducing inflation.
CBN cites improved economic conditions
The CBN governor said the recent stability in the foreign exchange market provided an appropriate environment for the rate adjustment.
According to Cardoso, previous monetary tightening had helped strengthen the economy, while inflation had moderated, external reserves had increased and investor confidence had improved.
He said the stability of the foreign exchange market had also supported capital-market growth.
Cardoso disclosed that Nigeria’s Gross External Reserves stood at $55.25 billion as of September 18, 2026.
He said this was the highest level recorded in 18 years and was enough to finance approximately 11.3 months of imports of goods and services.
The governor, who marked three years in office on Tuesday, also highlighted the CBN’s exchange-rate reforms, particularly the unification policy.
He said that before his tenure, fuel subsidies had reached about two per cent of Gross Domestic Product, GDP, while exchange-rate subsidies were as high as three per cent of GDP.
Cardoso argued that the combined five per cent burden could not be sustained by the economy and said reforms introduced by his administration helped avert further economic pressure.
CPPE describes rate cut as relief for businesses
Dr Muda Yusuf said the reduction was appropriate given the improving inflation trend and the cost pressures created by tight monetary conditions.
He noted that the previous 26.5 per cent MPR had become increasingly disconnected from inflation of about 15.4 per cent and money-market rates of roughly 20 per cent.
Yusuf said reducing the MPR to 23 per cent should help bring the policy rate closer to prevailing economic and financial-market conditions.
He added that the real sector could benefit through lower financing costs, improved business cash flow, increased investment and stronger productive capacity.
According to him, sectors such as manufacturing, agriculture, construction and logistics have been particularly affected by high borrowing costs.
Yusuf, however, noted that the economic impact of the rate reduction would ultimately depend on how effectively the change is transmitted to businesses and consumers.
NCMDLCA says borrowing costs remain high
Lucky Amiwero maintained that the 23 per cent MPR remained too high for many businesses, particularly companies that depend heavily on bank financing.
He argued that businesses continue to face significant operating costs, including expenses linked to electricity and poor road infrastructure.
Amiwero said businesses would continue to struggle if they could not obtain affordable credit.
He also raised concerns about exchange-rate policies and their effects on businesses involved in international trade.
CIS highlights possible capital-market effects
CIS President Fiona Ahimie said the immediate effects of the rate reduction could emerge in the fixed-income market as investors adjust to expectations of lower interest rates.
She said yields on government securities, particularly shorter-term instruments, could moderate as investors reassess their portfolios.
Ahimie also said lower returns on Treasury bills and other short-term instruments could influence investors to consider longer-term bonds and equities.
For the equities market, she said lower interest rates could reduce corporate financing costs, support credit growth and improve the valuation of future corporate cash flows.
However, she noted that the impact would differ across sectors.
Ahimie said the banking industry, for example, could experience both increased loan demand and pressure on net interest margins, depending on how quickly lending and deposit rates are repriced.
She also said foreign portfolio investment flows would depend not only on interest rates but on exchange-rate stability, inflation, external reserves and broader economic conditions.
VNL Capital describes move as major policy signal
The Chief Investment Officer of VNL Capital Asset Management, Dr Ubah Jeremiah, described the 350-basis-point reduction as a strong signal from the CBN.
He said the size of the cut was significantly larger than the 50 to 100 basis points that had been expected by some market participants.
Jeremiah linked the decision to developments in inflation, naira stability and the country’s external reserves.
He described the reduction in the MPR to 23 per cent as a significant change in the direction of monetary policy.
Source: Vanguard
