Nigeria Cuts Interest Rate By 350 Basis Points to 23%

BREAKING NEWSSeptember 22, 2026 at 2:17 PM UTC

TLDR

Nigeria's central bank cuts benchmark interest rate by 350 basis points to 23% to reduce borrowing costs as inflation eases.
Central Bank of Nigeria adjusts Standing Facilities Corridor to +50/-300 basis points, setting Standing Lending Facility at 23.5% and Standing Deposit Facility at 20%.
Rate cut aims to lower financing costs across the economy, contingent on bank response, inflation trend, and naira stability.

Nigeria’s central bank cut its benchmark interest rate by 350 basis points to 23%, delivering a large reduction in borrowing costs as inflation continues to ease. It is the largest reduction since 2007, after leaving rates unchanged in May and July. The Monetary Policy Committee made the decision at its 307th meeting in Abuja, reversing the 26.5% rate it maintained in July.

The move comes after annual inflation slowed to 15.39% in August, leaving the policy rate about 7.6 percentage points above headline inflation. The reduction marks another shift toward monetary easing after the central bank kept policy tight to contain inflation and support the naira.

The Central Bank of Nigeria also changed its Standing Facilities Corridor to +50/-300 basis points around the new policy rate. That puts the Standing Lending Facility at 23.5% and the Standing Deposit Facility at 20%, setting the rates at which banks can borrow from or place funds with the central bank.

Reserve requirements were left unchanged. Deposit Money Banks must continue to hold 45% of eligible deposits with the central bank, while the requirement for Merchant Banks remains at 16%. The Cash Reserve Requirement on non-TSA public-sector deposits was maintained at 75%.

The rate cut could lower financing costs across the economy if it passes through to bank lending and other market rates. Businesses and households have faced borrowing costs linked to the central bank’s earlier tightening cycle. The effect will depend on how banks respond, whether inflation continues to fall and whether the naira remains stable as monetary policy becomes less restrictive.

Key Takeaways

The size of the cut is the main story. A 350-basis-point reduction takes Nigeria’s policy rate from 26.5% to 23% in one move, while inflation stands at 15.39%. That leaves monetary policy restrictive even after the reduction, giving the central bank room to support credit without moving the benchmark below inflation. Lower rates can reduce funding costs for banks, companies and households, but the unchanged 45% Cash Reserve Requirement means a large share of bank deposits is still held at the central bank rather than available for lending. That could limit how much of the policy-rate reduction reaches borrowers. The decision also puts more focus on the naira. High interest rates have helped support local assets and attract capital, so faster easing could reduce that support if investors believe returns no longer compensate for currency and inflation risk. At the same time, lower borrowing costs could support investment as Nigeria’s economy grows and inflation slows. The next test will be whether bank lending rates and government bond yields begin to fall without reversing progress on inflation or foreign-exchange stability.

Nigeria