This follows a decline in inflation, which has fallen for 11 consecutive months to 15.1% in January, according to CBN Governor Yemi Cardoso.

The MPR sets the benchmark for borrowing costs in the economy. Lowering it could reduce funding expenses for digital lenders, who rely on borrowed capital rather than customer deposits.

“Digital lenders and members of the Money Lenders Association usually borrow at interest rates linked to MPR, so any change in such MPR will have a significant impact on our cost of lending to customers,” Gbemi Adelekan, president of the Money Lenders Association, said in a report.

Unlike commercial banks, which fund loans largely with customer deposits, most digital lenders depend on wholesale funding, private capital, or institutional borrowing.

This makes them highly sensitive to changes in benchmark rates. High MPR levels over the past year have forced many lenders to either raise loan rates or absorb thinner margins.

Currently, commercial banks charge annual interest rates exceeding 30% in some cases, while digital loan apps charge between 5% and 15% monthly.

Experts caution that borrowers should not expect immediate relief.

“Everyone benchmarks around MPR and their cost of borrowing,” said Babatunde Akin-Moses, co-founder of digital lending app Sycamore. “Rates should come down as the cost of funds becomes cheaper, but it may not happen immediately since some loans are already in effect, and may not have agreed variable rates with customers.”

Adeshina Adewumi, CEO of Trade Lenda, a digital bank for small businesses, also anticipates only modest changes. “I do not envisage any significant impact,” he said.

“However, a lower MPR means lower cost of funds to digital lenders, and we can afford to relax our numbers slightly.” Adelekan expects loan app interest rates to stay largely within the current range for now.

The digital lending sector in Nigeria has grown even as households seek short-term credit to manage living costs and limited access to traditional bank loans.

As of February 2026, the Federal Competition and Consumer Protection Commission had authorised 469 digital lenders. Consumer credit reached ₦3.11 trillion ($2.31 billion) in Q3 2025, with personal loans accounting for more than two-thirds of activity.

High interest rates have prompted lenders to move away from small nano loans, usually under ₦10,000, toward larger loans for customers with verifiable income.

“High MPR rates led to a tightening of credit by our members,” Adelekan said. “Lately, most of our digital lenders are shifting away from high-risk, small-ticket nano loans (under ₦10,000) toward quality and customers with verifiable income to reduce our non-performing loans.”

The sector is now prioritising portfolio quality over rapid user growth, showing a prudent recalibration as borrowing conditions gradually respond to monetary policy easing.

Governor Olayemi Cardoso made the announcement on Tuesday, confirming that the decision was unanimous among committee members. 

Alongside the Monetary Policy Rate (MPR), the Cash Reserve Ratio (CRR) for commercial banks remains fixed at 50%, while mortgage banks continue with 16%. The Liquidity Ratio (LR) stays at 30%, and the asymmetric corridor remains unchanged at +500/-100 basis points around the MPR.

This decision is coming against the backdrop of slightly improving inflation figures. Nigeria’s inflation rate eased to 23.7% in April, according to the National Bureau of Statistics. That figure, though still high, provided a narrow window for policymakers to pause further tightening.

Cardoso offered a measured explanation for the committee’s choice: “The committee unanimously agreed to retain MPR at 27.50 percent.” The rationale, he said, was based on ongoing economic adjustments and the need to consolidate recent gains.

This pause is a cautious departure from a series of previous hikes. Since mid-2023, the CBN has steadily increased rates in a bid to fight inflation and manage currency volatility. The current move, while conservative, signals a wait-and-see approach amid fragile macroeconomic conditions.

We’re also watching the naira. As of last week, the official exchange rate hovered around N1,598.72 per dollar, with the parallel market offering slightly worse at N1,635. This narrowing gap is one of the few indicators suggesting some stability, though risks remain.

Inflation is the major concern. Food prices continue to stretch household incomes, and insecurity in food-producing states only complicates matters. “Members, however, were not oblivious to the risk of persisting inflationary pressures driven largely by food prices,” Cardoso said at the briefing.

From where we stand, it’s obvious that the CBN is trying to strike a balance. They’re holding the line, hoping that prior policies begin to bite, but also ready to act again if inflation refuses to budge. The decision to maintain high reserve requirements for banks also sends a strong message, liquidity will be tightly managed.

In plain terms, the CBN is being careful. There’s no rush to ease. No gamble. Just methodical restraint in the hope that inflation softens, the currency strengthens, and confidence returns.

The next MPC meeting is expected to take place in the coming weeks. By then, we’ll have fresh inflation numbers, a better sense of GDP growth, and perhaps a clearer picture of how long this high-interest-rate environment can be sustained.

The highlight of the CBN’s memo was the apex bank’s decision to liberalize the market “in terms of who can sell and who can buy. Recall that President Bola Tinubu promised to change the country’s monetary policy, restoring it to its former position as the continent’s top investment location.

In its letter, the CBN instructed banks that, with the exception of a maximum N1 bid-ask difference between the buy and sell rates, they could purchase foreign exchange from any source at any rate and sell it at any rate. The Investors and Exporters (I&E) rate, which is N750-N755/$, is presently the price at which banks can buy and sell foreign currency.

In order to provide efficient and effective price discovery in the Nigerian FX market, the Investors’ and Exporters’ FX Window is the market trading section for investors and exporters. It enables FX deals to be made at exchange rates decided based on current market conditions.

While the CBN’s unification decision comes at a time when Nigeria is in dire need of a monetary solution, the ripple impact of the decision must be assessed by all segments of the economy.

Liberalization

The CBN’s FX unification means that official and unofficial bodies could buy on the interbank market from anybody without seeking Central Bank approval.

There was a restriction on who could buy, though. The CBN states that only qualified transactions are allowed to sell foreign currency.

The CBN forbade importers from using the FX market to obtain currency for the purchase of 41 products in the middle of 2015. The list of items, which included some inputs for production, only gave broad descriptions.

Export

The CBN’s move to impose restrictions on eligible transactions is a subtly revealed signal of the central bank’s motivation to increase Nigerian exports relative to imports.

A country must harness sufficient resources for the creation of goods and services, as well as consume and export some completed goods and raw materials that cannot be produced domestically, in order to develop and raise the standard of living of its people. More Nigerians are urged to export at the current rate.

Large amounts of Nigerian exports during the 1960s and 1970s were controlled by the agriculture industry, which was a significant source of foreign income.

In March 2023, Nigeria reported a trade surplus of NGN 908.5 billion, compared to a deficit of NGN 617.1 billion in the same month the previous year. Imports decreased by 59.8% from the previous year to NGN 1,376 billion, mostly as a result of fewer purchases of other oil products (down 89.4%), manufactured goods (down 27.6%), and raw materials (down 10.7%).

As a result of steep drops in shipments of manufactured goods (-59%), energy (-73%), raw materials (-59.1%), and crude oil (-17.2%), exports declined at a slower rate of 18.7% to NGN 2,285 billion, more than offsetting gains in shipments of agricultural goods (21.9%).

The optimum moment to advocate for higher exports to raise Nigeria’s trade surplus is definitely right now.

Capital

As foreign exchange would be traded at a favorable rate under a single exchange rate, the government’s revenue from the sale of FX would rise. The foreign exchange market has more liquidity and is less uncertain under a single exchange rate regime.

The CBN would provide more exchange rate surpluses to the federation account, increasing government revenue and naira cards may be used for some overseas transactions.

In the short to medium term, it would make it easier to clean up the economy’s naira liquidity. The future outlook for inflation would improve as a result of this.

Debt

The government’s debt in naira terms will significantly increase as a result of the CBN’s FX unification. The parallel exchange rate in Nigeria is detrimental, according to David Malpass, President of the World Bank Group, as it affects upcoming debt service obligations and raises the possibility of debt distress.

Taiwo Oyedele a Fiscal Policy Partner and Africa Tax Leader at PwC highlighted that the debt ranged from N12 trillion to N90 trillion in Naira terms. He added that the ratio of debt to gross domestic product would rise by 5%.

Due to the aforementioned, the debt to GDP ratio will rise by roughly 5%, the cost of debt service for foreign debt will rise in line with it, and the government’s revenue will rise in naira terms, resulting in a higher tax/revenue to GDP ratio.

Crypto Trading

The value of cryptocurrencies and the USD are inversely correlated. The outperformance of the dollar is bad for cryptocurrencies because most Bitcoin trades are against the USD.

Due to the unification, P2P trades in Nigeria must be conducted using the prevailing USD exchange rate.

Larry Frank, a blockchain expert, noted that said: bitcoin price has always been determined by the black market rate, so since the black market rate didn’t change, we are good for now.”

As a trader, it is vital to be aware of how movements in the dollar can impact your holdings.

The data obtained from the apex bank, total government credit increased from N24.66 trillion in December 2022 to N28.43 trillion at the end of February 2023.

The CBN also noted in its ‘Money and Credit Statistics report that the credit rose from N14.9tn as of the end of January 2022 to N26.65tn in the corresponding period of 2023.

In the report, Aliyu Sanusi, a member of the Monetary Policy Committee (MPC), stated that tightening rates became necessary at the January meeting to contain the effects of 2023 election-related spending and the liquidity associated with the proposed government borrowing in 2023.

He also mentioned that net claims on the government increased by 78.15 percent (y-t-d) in December 2022, which was driven by FGN borrowing from the central bank (93.21%), commercial banks (44.26%), and non-interest banks (79.13 percent).

“This suggests that monetary and fiscal factors have continued to play an important role in the current inflationary processes,” Sanusi noted.

Emefiele stressed the significance of POS agents in the apex bank’s cashless program when he went before the House of Representatives to advise the lawmakers on recent monetary policies, particularly the cash withdrawal restriction.

In the hinterlands, where there might not be financial institutions, he stated that it was crucial to make sure that people have access to financial services.

The Governor stated that the POS would provide the fastest financial service in remote communities while being represented by the Deputy Governor for Financial System Stability, Aisha Ahmed.

He said that there were 1.4 million agents, 14,000 ATMs, 900,000 POS terminals, 6,500 bank locations, and 6,500 POS terminals nationwide.

“Today, we have a very robust payment system that includes bank branches, branches of micro-finance banks, POS machines, ATM machines, agent banking, E-Naira, and many other options.

“To be specific, between the bank and the micro-finance banks, we have 6,500 locations, 900,000 POS terminals, 14,000 ATMs across the country, and 1.4 million agents nationwide and every single local government in Nigeria has agent represented. We also have a proliferation of electronic transactions. Just by way of a quick example, in 2012, we had N48 billion in POS transactions. Today, we have N6 trillion in POS transactions.

“Going to the cash withdrawal limit that was issued in response to the feedback from Nigerians in response to the comments made by this revered chamber, we took those feedbacks on board. CBN mentioned that we will be flexible in the implementation of this policy in response to the stakeholders’ sentiments.

“We have since reviewed the limit significantly from N100,000 that we had per week to N500,000 per week for individuals; from N500,000 per week for corporate to N5 million per week for corporate.

“We have also amended the processing from 5 and 10 percent downward to 3 and 5 percent. We have clarified the strategic importance of agents as important participants in the financial system because they play a key role in certain underserved segments in the rural areas and in certain market areas and they as well would be covered by this newly revised rule.

Every other interest rate employed in an economy is based on the monetary policy rate (MPR), which serves as its foundation.

Speaking to reporters on Tuesday at the CBN offices in Abuja following the committee meeting, governor Godwin Emefiele said the increase in interest rates would continue to assist rein in growing inflation.

The committee also retained the cash reserve ratio (CRR) at 32.5 percent and retained the liquidity ratio at 30 percent

CRR is the share of a bank’s total customer deposit that must be kept with the central bank in the form of liquid cash.

According to Emefiele, at this time of high inflation loosening it “would greatly jeopardize the gains of previous policy rate hikes”.

He said due to all the causative factors such as Russia, the Ukraine war, supply chain disruptions, the slowdown in China, rising inflation in advanced economies, and other headwinds, it became dominant that a losing option was not desirable at this meeting.

“With a rise in inflation, loosening the stance of policy will lead to a more aggressive rise in inflation and will erode that gain already achieved through tightening as regards whether to hold MPC was of the view that they won’t stand at the period close to December festive and expected heavy spending during 2023 general election,” Emefiele said.

“MPC decided to continue to tighten, but at a somewhat more moderated rate, noting that tightening the stance of policy would narrow the negative real effective interest rate margin and force improve market sentiment and further restore investors confidence.”