CBN Cuts Benchmark Rate to 23% in Major Policy Shift
Central Bank slashes interest rate by 350 basis points, citing disconnect between policy rates and actual market lending costs.
Nigeria's Central Bank has reduced its benchmark interest rate to 23 percent from 26.5 percent, marking a substantial 350 basis point adjustment announced Tuesday by Governor Olayemi Cardoso following the Monetary Policy Committee's 307th meeting in Abuja. The decision represents a significant recalibration of monetary policy after months of rate increases aimed at controlling inflation.
The CBN characterised the move as an operational reset rather than conventional monetary loosening. According to the bank's explanatory statement, the previous rate had become misaligned with actual lending rates in financial markets, hampering the effectiveness of monetary policy transmission to the real economy.
The adjustment includes modifications to the standing facilities corridor, which now operates at plus 50 and minus 300 basis points around the new benchmark rate. Business leaders and economists have responded positively to the announcement, with the Organised Private Sector calling on commercial banks to translate the policy shift into lower borrowing costs for enterprises.
However, expert reactions remain divided, with some analysts questioning the magnitude of the cut and others raising concerns about political influence on the decision. The CBN retained the Cash Reserve Requirement at its existing level.
Governor Cardoso also reported progress on Nigeria's external position, stating that foreign exchange reserves have climbed above $55 billion, their highest level in more than 18 years. The bank attributed this achievement to consistent monetary policy discipline and inflows from diaspora remittances.
The reserve rebuild reflects broader efforts to stabilise the naira and strengthen Nigeria's external buffers.
