CBN Keeps Interest Rate at 27%: What It Means for Loans, Inflation, and Your Money in 2026

The Central Bank of Nigeria (CBN) has maintained its benchmark interest rate at 27 percent, continuing its pause on monetary tightening as it works to consolidate gains in price stability, exchange rate management, and capital inflows.

CBN Governor Olayemi Cardoso announced the decision on Tuesday in Abuja at the conclusion of the Monetary Policy Committee’s (MPC) 303rd meeting, attended by all twelve members. According to the governor, the committee voted by majority to maintain the current monetary policy stance, citing the need for previous measures to take full effect across the economy.

“The Committee decided by a majority vote to maintain the monetary policy stance,” Cardoso stated, emphasizing that the bank remains committed to its disinflation strategy despite calls for lower borrowing costs from parts of the private sector.

This marks the fourth time in 2025 that the MPC has held the benchmark rate steady, following a 50-basis-point cut in September—the only reduction since a series of six rate hikes in 2024 aimed at controlling inflation and supporting the naira.

The committee also adjusted the corridor around the benchmark rate to +50/-450 basis points and retained the Cash Reserve Ratio at 45 percent for deposit money banks, 16 percent for merchant banks, and 75 percent for non-TSA public-sector deposits. The liquidity ratio was maintained at 30 percent.

The CBN highlighted that inflation has fallen for seven consecutive months, from 34 percent a year ago to 16.05 percent in October. Food inflation slowed to 13.12 percent from 16.87 percent, while core inflation eased to 18.69 percent. The decline is attributed to sustained monetary tightening, improved foreign exchange market stability, increased capital inflows, and relatively stable fuel prices.

Governor Cardoso stressed that price stability is just the first step toward broader economic growth. “After stability comes investment, and after investment comes growth,” he said, noting that investors previously deterred by volatility are beginning to return. He added that Nigerians would gradually feel the benefits of stability through improved job creation and incomes.

A key highlight of the MPC meeting was the improvement in Nigeria’s foreign reserves, which rose to $46.7 billion in October from $42.77 billion in September, providing roughly ten months of import cover. Cardoso credited this growth to rising non-oil exports, stronger oil production, increased remittances, and renewed interest from foreign portfolio investors, all encouraged by a market-reflective exchange rate framework.

He described the current foreign exchange system as unprecedented, with electronic trading enhancing transparency and confidence among market participants. Daily FX market turnover now averages $500 million, and travelers can use naira-linked cards abroad with greater ease.

On the domestic economy, GDP expanded by 4.23 percent in the second quarter, up from 3.13 percent in the first. The Purchasing Managers’ Index (PMI) climbed to 56.4 in November, its highest in five years, indicating stronger non-oil activity and improved business confidence.

The CBN also reviewed the banking sector’s recapitalization, noting that 16 banks are fully compliant and 27 are raising capital. This recapitalization strengthens banks’ ability to expand across Africa while managing risks. Cardoso emphasized that the CBN is moving away from intervention-heavy policies that previously created market distortions, noting that the bank now supports development finance indirectly without undermining market dynamics.

Additionally, Nigeria’s removal from the Financial Action Task Force (FATF) grey list was highlighted as a major milestone that will improve remittance flows, correspondent banking access, and investor confidence.

Cardoso reaffirmed the importance of close collaboration between fiscal and monetary authorities in achieving inflation-targeting goals. “It is that collaboration that has brought stability,” he said, underscoring the CBN’s commitment to transparency, consistency, and clear communication in its policy framework.

The MPC’s decision reflects a careful balance between sustaining macroeconomic stability and supporting growth, signaling confidence in Nigeria’s ongoing economic recovery.