Prof. Uche Uwaleke, the President of the Capital Market Academics of Nigeria (CMAN), has described the 50 basis points cut in interest rate by the Monetary Policy Committee (MPC) as a prudent, cautious and credibility-building move.
The Central Bank of Nigeria (CBN) during the first MPC of 2026, cut the interest rate by 50 basis points to 26.50 per cent from 27 per cent.
Speaking with NAN in Abuja on Tuesday, Uwaleke said the move was consistent with a central bank that wanted to consolidate macroeconomic stability.
He said the decision also aligned with the recapitalisation exercise, quoting the bank as saying that 20 banks had met the new capital thresholds.
Uwaleke noted that stability was critical during such structural adjustments adding that a measured rate cut would help to avoid unnecessary volatility.
He described the cut as a transition from tightening mode to calibrated easing mode which was important for market confidence.
According to him, 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.
“Reserves are at a 13-year high, the exchange rate is relatively stable, and capital inflows are improving.
“Much of the disinflation we are seeing now is the delayed effect of earlier tightening.
“If the CBN eases too quickly, it could reverse those gains, remember, inflation expectations in Nigeria are historically fragile.
“The CBN wants to consolidate credibility before accelerating easing,” he said.
Uwaleke said the 50 basis points cut signalled three objectives which hinged on supporting growth as Purchasing Managers’ Index at 55.7 points suggested expansion, preserving exchange rate stability, and anchoring inflation expectations.
“The communique mentions potential election-related fiscal spending as an upside risk.
“If fiscal policy becomes expansionary, monetary policy may need to stay tighter for longer.
“A gradual easing cycle gives the CBN flexibility,” he said.
The expert said that if disinflation continued for another two to three months and external conditions remained stable, there could be further gradual cuts.
“But the era of aggressive easing is unlikely unless inflation falls much faster or growth weakens sharply.”
NAN also reports that the CBN announced the decision at its 304th MPC meeting.
