AAG CAPITAL SAYS CBN RATE CUT MARKS POLICY SHIFT

Investment firm AAG Capital has said the Central Bank of Nigeria’s decision to reduce its Monetary Policy Rate from 26.5 per cent to 23 per cent signals a change in the way monetary policy is being managed.

The CBN announced the 350-basis-point reduction at its September Monetary Policy Committee meeting, while also adjusting the standing facilities corridor to +50/-300 basis points. The Cash Reserve Requirement was left unchanged.

AAG Capital said the decision should not be viewed simply as an attempt to make borrowing cheaper. Instead, it said the CBN was seeking to bring its benchmark rate closer to the rates at which funds were actually trading in the financial system.

The firm said the previous 26.5 per cent MPR had become increasingly disconnected from market rates, weakening the transmission of monetary policy.

According to AAG Capital, keeping the CRR unchanged also indicates that the CBN is reducing the cost of money without seeking to inject liquidity broadly into the banking system.

The investment firm said improving inflation, economic growth and external reserves had created room for the rate adjustment. Nigeria’s real Gross Domestic Product grew by 4.43 per cent in the second quarter of 2026, while external reserves stood at $54.81bn, according to the analysis.

AAG Capital said lower rates could affect fixed-income investments, equity valuations and corporate borrowing costs as financial markets adjust.

However, it identified inflation, oil prices, exchange-rate movements, government borrowing and global developments as factors that could influence the direction of monetary policy in the coming months.