The Central Bank of Nigeria’s decision to reduce its benchmark interest rate to 23% has received the backing of the International Monetary Fund (IMF), which described the move as a measured response to easing inflation rather than a departure from its anti-inflation stance.
At its September Monetary Policy Committee meeting, the CBN cut the Monetary Policy Rate by 350 basis points to 23%, down from 26.5%. The reduction surprised many market watchers, who had anticipated that the bank would hold the rate amid lingering concerns over price stability. The committee also adjusted the Standing Facilities Corridor but retained the existing Cash Reserve Requirement for deposit money banks, merchant banks and non-Treasury Single Account public sector deposits.
The CBN’s rate cut followed a prolonged period of monetary tightening designed to curb inflation and stabilize the economy. Nigeria’s headline inflation eased slightly to 15.39% in August 2026 from 15.43% in July, according to the National Bureau of Statistics, marking the third straight month of decline and giving the bank room for a cautious policy adjustment.
Speaking at the IMF-World Bank Annual Meetings in Thailand, the Fund’s Director for Africa, Zeine Ould Zeidane, said the CBN was right to begin normalizing borrowing costs given the progress made against inflation. He, however, stressed that the overall monetary stance remains tight and that the rate reduction should not be read as a shift towards an accommodative policy.
Zeidane said the CBN must continue to respond to incoming data, with bringing inflation down towards its target remaining the priority. The IMF also cautioned that several African central banks may still need to tighten policy further, a firmer position than it took in its April assessment.
The endorsement offers international support for the CBN’s move to lower borrowing costs after an extended tightening cycle. But the bank still faces a delicate balancing act: further rate cuts will depend on whether inflation continues to moderate and whether recent gains can be sustained.
