FG Applauds CBN’s Interest Rate Cut to 26.5%

By 𝔸bdulrazak Tomiwa

The Federal Government has welcomed the Central Bank of Nigeria’s (CBN) decision to reduce the interest rate from 27% to 26.5%. Announced on February 24, 2026, this 50-basis-point cut aims to boost economic growth and ease the financial burden on the real sector.

The reduction follows 11 months of falling inflation, which dropped to 15.10% in January. Improved food supply and previous tightening measures have stabilized prices, allowing the CBN to pivot toward supporting business productivity and job creation.

Justifying the shift, CBN Governor Olayemi Cardoso stated, “The committee’s decision for rate cuts was premised on the balanced and ongoing disinflation and sustained exchange rates stability in the country.”

To prevent a surge in inflation, the CBN kept the Cash Reserve Ratio at 45% and the liquidity ratio at 30%. These measures ensure that the lower interest rate does not lead to excessive cash flow in the economy.

Nigeria’s economic outlook is further bolstered by foreign reserves hitting a 13-year high of $50.45 billion. This robust buffer has strengthened the Naira and increased investor confidence, aided by higher export earnings and remittance inflows.

While commercial lending rates may take time to drop, the cut is seen as a positive signal for the banking sector. The government remains optimistic that this policy shift will lower business costs before the next review on May 19, 2026.