Lagos: Nigeria's central bank said on Tuesday it had slashed its key interest rate by more than 3.5 percentage points -- the largest cut in nearly two decades.
The move is designed to shore up the monetary policy of President Bola Tinubu, who is seeking a second term in January.
Since coming to power in 2023, Tinubu has scrapped a costly fuel subsidy that had kept petrol prices artificially low for decades, ended support for the country's currency, the naira, and embarked on an overhaul of the tax system.
Economists have deemed these reforms necessary to revive the country's economy, but they have led to a sharp rise in the cost of living and increased poverty in Africa's most populous country.
The Central Bank of Nigeria's governor Olayemi Cardoso said the base rate of interest was now 23 percent, down from 26.5 percent previously -- the lowest level since March 2024.
"(This) represents an operational realignment of the framework and should not in itself be construed as a change in the policy stance," Cardoso told a press conference in Abuja.
He welcomed what he said was the growing resilience shown by the Nigerian economy, as evidenced by the slowdown in inflation, the strength of foreign exchange reserves and the strengthening of investor confidence.
Inflation stood at 15.4 percent in August, having peaked at more than 30 percent throughout 2024.
The bank's governor also welcomed "the considerable improvement in the balance of payment surplus of $3.51 billion in the second quarter of 2026, compared with $2.38 billion in the first quarter of 2026".
While Tinubu is hoping to use his economic record to secure re-election in January, his opponents have pointed to rising poverty and the decline in household purchasing power.
According to the International Monetary Fund, 63 percent of the country's 235 million people were in poverty by the end of 2025.
More than 27 million Nigerians also suffered from food insecurity during the year.
