Analysts back MPC’s 50 basis-point rate cut

Analysts have backed the decision of the Monetary Policy Committee of the Central Bank of Nigeria to cut the rate by 50 basis points.

The stakeholders affirmed that the rate cut to 26.5 per cent is mostly viewed as a credibility-building signal rather than the start of rapid easing.

The PUNCH reports that at the end of the first meeting in 2026, the MPC reduced the monetary policy rate by 50 basis points to 26.5 per cent. It retained the Standing Facilities Corridor around the MPR at plus or minus 450 basis points and retained the Cash Reserve Requirement for Deposit Money Banks at 45.00 per cent, Merchant Banks at 16.00 per cent, and 75.00 per cent for non-TSA public sector deposits.

According to the MPC decision document, the rate cut followed sustained disinflation, improved external buffers, and banking sector resilience, with reserves reaching a 13-year high and inflation slowing to 15.1 per cent. The committee stressed that the adjustment reflects policy normalisation within a still-restrictive stance rather than a full easing cycle.

Economic analysts, such as those at Coronation Merchant Bank, say the modest rate cut reflects the MPC’s desire to protect hard-won inflation gains while signalling responsiveness to improving macroeconomic conditions.

The President of the Capital Market Academics of Nigeria, Professor Uche Uwaleke, said the decision demonstrates a deliberate and strategic transition.

“To start with, I consider the 50 basis point cut a cautious move by the MPC. Granted, inflation has been falling for eleven consecutive months, headline inflation is down to 15.10 per cent, food inflation has dropped sharply, and month-on-month inflation even turned negative. That is a very strong signal that prior tightening is working. So, the natural question is why not cut more aggressively, but the answer lies in risk management and the recognition that monetary policy operates with significant lags,” he said.

He added that aggressive easing could undermine the credibility the Central Bank has built through its tightening cycle: “Much of the disinflation we are seeing now is the delayed effect of earlier tightening.