CBN cuts MPR to 23 per cent in September after 350 basis point reset

The Central Bank of Nigeria cut the Monetary Policy Rate to 23 per cent from 26.5 per cent at its 307th meeting on September 21 to 22, 2026, a 350 basis point reduction, according to Communique No. 164 published by Proshare. Eleven members attended. BusinessDay described it as the biggest cut on record, while Bloomberg described it as the biggest in almost two decades.

Governor Olayemi Cardoso called the move an operational reset to improve the effectiveness of monetary policy and aid the shift to an inflation targeting framework, according to Premium Times and Nairametrics. The committee pointed to a disconnect between the policy rate and prevailing market rates.

The decision in full

• MPR: 23 per cent, down from 26.5 per cent.
• Standing Facilities Corridor: plus 50 minus 300 basis points around the MPR, according to Nairametrics and BusinessDay. That puts the Standing Lending Facility at 23.5 per cent and the Standing Deposit Facility at 20 per cent, down from 27.0 per cent and 22.0 per cent under the prior plus 50 minus 450 corridor.
• Cash Reserve Requirement: retained at 45 per cent for deposit money banks, 16 per cent for merchant banks, and 75 per cent on non TSA public sector deposits, according to Arise News and PM News.
• Liquidity ratio: retained at 30 per cent.
• Next meeting: November 23 to 24, 2026, according to Proshare.

For context on how the corridor and the reserve ratios shape deposit and lending rates, see our MPR and CRR explainer and the prior CBN hold note when the rate stayed at 26.5 per cent in July.

Why the committee pointed to headroom

Headline inflation eased to 15.39 per cent in August 2026 from 15.43 per cent in July, according to figures presented by the MPC and reported by The Sun and Arise News. The committee noted three consecutive months of decline.

• Food inflation: 19.57 per cent in August, down from 20.31 per cent in July, linked by the CBN to lower prices of palm oil, vegetables and meat.
• Core inflation: 13.29 per cent, down from 14.97 per cent.
• 12 month average urban inflation: 16.28 per cent for the 12 months ending August 2026, compared with 29.73 per cent in the corresponding period of the prior year, according to Politics Nigeria.
• Real GDP: 4.43 per cent growth in the second quarter, according to Proshare.
• External reserves: 55.25 billion dollars on September 18, an 18 year high, according to the MPC communique via Proshare, TVC News and EBC Financial Group. The path ran from 48.35 billion dollars at end March to 51.39 billion dollars at end June, past 53.99 billion dollars on September 2 and 54.08 billion dollars on September 3, before the September 18 print.

Cardoso also pointed to relative stability in the foreign exchange market as part of the backdrop. Daily Post Nigeria quoted him saying reserves were in the best position in 18 years and describing FX stability as a key achievement of the period.

What the cut can change for readers

A lower MPR does not lower every rate on the same day. It changes the ceiling and floor that banks use to price funds, then transmits through OMO, Treasury bills, bonds and loan books at different speeds.

• Savings and fixed income: Standing Deposit Facility moves to 20 per cent. Primary Treasury bill stop rates often follow with a lag and by a smaller step. The September 23 auction is the first live test. Our Treasury bills starter explains the link between stop rates and stated returns.
• Loans: Standing Lending Facility moves to 23.5 per cent from 27.0 per cent. That can ease pressure on new loan pricing over time, but CRR at 45 per cent still keeps a large share of deposits at the CBN without interest, which limits how fast banks reprice.
• Naira channel: Reserves at 55.25 billion dollars expand the buffer to absorb shocks. That does not set a naira level. The CBN describes the regime as willing buyer, willing seller. Our naira and reserves note tracks how to read the NFEM close together with turnover and reserves.
• Stocks channel: Nairametrics quoted analysts saying lower fixed income yields can lift demand for equities as holders rotate in search of higher returns. That rotation shows up first in large, liquid names before it broadens. For how to track that broadening, see our guide to reading NGX earnings reports.

What to watch

• Treasury bill auction on September 23: whether 91 day, 182 day and 364 day stop rates fall by less than the policy cut, as CSL Stockbrokers expects.
• November MPC: whether the committee pauses to assess transmission or continues the reset path. Guidance remains data dependent.
• Food inflation: still near 19.57 per cent, well above headline. The next two prints decide how much room remains.
• Reserves and turnover: whether reserves hold above 55 billion dollars and whether FX turnover stays steady with the firmer naira.

Frequently asked questions

Frequently asked questions

How large was the September cut?

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The MPR moved to 23 per cent from 26.5 per cent, a 350 basis point cut at the September 21 to 22 meeting. It followed a hold at 26.5 per cent at the July meeting.

Why did the CBN call it a reset?

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The communique pointed to a divergence between the policy rate and market rates. The reset aims to restore the signalling power of the MPR and support the planned move to inflation targeting, rather than pre commit to a long easing run.

Does the cut mean loans get cheaper immediately?

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Not automatically. The Standing Lending Facility falls to 23.5 per cent, but loan pricing also reflects CRR at 45 per cent, liquidity conditions, credit risk and existing contracts. Treasury bill and OMO prints give an earlier read on transmission than loan books.

Verify: read Communique No. 164 for September 21 to 22, 2026 on the Central Bank of Nigeria website.