CBN
CBN cuts interest rate to 26.5%, confirms 20 banks met recapitalisation target
Olayemi Cardoso, Governor of the Central Bank of Nigeria, announced on Tuesday that 20 out of Nigeria’s 33 banks have already met the new minimum capital requirements under the ongoing recapitalisation programme.
In a decisive move long anticipated by businesses and financial market operators, the CBN reduced its benchmark interest rate — the Monetary Policy Rate — by 50 basis points to 26.50 percent, marking a cautious but significant shift toward monetary easing after months of aggressive tightening.
The decision was taken at the 304th meeting of the Monetary Policy Committee held in Abuja, where all 11 members voted unanimously in favour of the cut — a rare show of consensus that underscores growing confidence in Nigeria’s improving macroeconomic outlook.
Cardoso, who announced the outcome on Tuesday, said the move reflects moderation in inflationary pressures, improved foreign exchange liquidity, and sustained stability in the financial system.
For many analysts, the rate cut signals a clear change in tone: the fight against inflation remains a priority, but the CBN is now cautiously pivoting to support growth.
Cardoso disclosed that another 13 banks are at an advanced stage of capital raising processes and are expected to conclude within the specified timeframe.
“To date, 20 banks have fully met the new minimum capital requirement and a further 13 are at an advanced stage of their capital raising processes, and quite frankly, are expected to conclude at a stipulated time,” he said. “The other institutions are still finalising their plans and evaluating a range of strategic options — and there’s time — which of course includes consolidating where appropriate.”
Furthermore, Cardoso revealed that as of February 19, 2026, total verified and approved capital raised stood at N4 trillion.
“Of this, N2.90 trillion, which is 71.6 percent, has been mobilised domestically with $706.84 million, which is N1.15 trillion, representing 28.33 percent, foreign,” he explained. “So in summary, 71.67 percent is domestic mobilisation and 28.33 percent is foreign participation.”
The exercise, designed to strengthen banks’ balance sheets and position them to support Nigeria’s long-term growth ambitions, had sparked concerns about potential mergers, acquisitions or market exits. However, the update suggests strong investor appetite and institutional resilience.
Industry observers say successful recapitalisation significantly reduces systemic risk and enhances banks’ capacity to finance large-scale projects across infrastructure, manufacturing, agriculture and energy. Combined with moderate easing, the recapitalisation drive sends a reassuring message that the financial system remains solid, even as policy begins to soften.
Despite lowering the headline rate, the MPC adopted a guarded posture by retaining other key monetary parameters.
The committee retained the asymmetric corridor around the MPR at +50/-450 basis points, kept the Cash Reserve Requirement for commercial banks at 45 percent, maintained the CRR for merchant banks at 16 percent, retained the 75 percent CRR on non-TSA public sector deposits, and left the Liquidity Ratio unchanged at 30 percent.
By maintaining one of the highest CRRs globally, the CBN signalled that while interest rates are being trimmed, liquidity expansion will remain tightly controlled.
Financial analysts describe this as a “measured and data-driven easing cycle,” rather than the start of aggressive loosening.
“This is not a full pivot,” Johnson Chukwu, Managing Director of Cowry Research said in a note. “It is a careful shift from fighting inflation aggressively to supporting growth, while still keeping financial stability in focus. It’s a measured step, not a full easing cycle yet, but clearly a change in tone.”
For months, Nigeria’s elevated interest rate environment — which saw borrowing costs climb to multi-decade highs — has weighed heavily on manufacturers, SMEs and investors. Private sector operators had repeatedly urged the CBN to soften its stance, arguing that high funding costs were choking expansion plans and dampening job creation.
The modest 50 basis-point cut is therefore being interpreted as a response to improving macro fundamentals. Market participants say the decision reflects a delicate balancing act between boosting domestic economic activity and preserving foreign investor confidence.
“While lending rates may not fall immediately, the direction is now more supportive for businesses and economic activity,” Chukwu noted. The pass-through effect to borrowers may be gradual, especially given the tight liquidity conditions enforced through high reserve requirements.
One of the key pillars supporting the easing decision is improved foreign exchange stability. Over the past year, reforms in Nigeria’s FX market — including efforts to unify rates and improve transparency — have strengthened liquidity and boosted investor confidence. The naira has shown relative stability in recent months, while FX reserves have risen.
Inflation, though still elevated, has shown signs of moderation, providing breathing space for policymakers.
Matthew Anthony, Market Analyst at FXTM, said the rate cut was widely expected. “With favourable fundamental forces at play, it was always a question of how much rather than if rates would be cut,” Anthony said. “Although some were expecting a hefty 100-basis point reduction, this 50-basis point cut is still a positive move by the CBN, mirroring the dovish strategy of other major banks on the continent.”
According to him, cooling inflationary pressures, a stronger naira and rising FX reserves created the policy space for easing. “This move is likely to boost confidence over the economic outlook ahead of the Q4 GDP report scheduled for release later this month,” he added.
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