CBN cuts MPR by 350bps to 23%, boosts Nigeria equities market as NGX rises
The Central Bank of Nigeria cut its benchmark interest rate by 350 basis points to 23% after the 307th Monetary Policy Committee meeting, marking the second MPR reduction in 2026. As of Tuesday, September 22, the Nigerian Exchange All-Share Index gained 0.18% to close at 250,614.66 points, with market capitalisation rising by N297.21 billion to N162.68 trillion and the year-to-date return reaching +61.05%. There were 36 gainers against 26 decliners. Market analysts say lower borrowing costs will encourage investors to shift from fixed-income securities to equities as government bond yields adjust downward. Chief Blakey Ijezie of Okwudili Ijezie & Co expects a surge in equity transaction volume and higher share prices, noting that the fixed-income market will decline as investors migrate to equities for better returns. Abiodun Ogunniyi of GTI Group added that the rate cut improves credit access for the real sector, potentially boosting production and consumer spending, though banks still charge 30-35% on some lending products. The cut follows a trend of falling Treasury bill rates, with the 364-day rate dropping from 17.59% in August to 16.62% by September 9. By end-August, 61 stocks had delivered over 30% share-price gains, including 18 with triple-digit gains, and the Dangote Refinery IPO’s 4.1 billion shares at N525 each has increased retail participation in the capital market. The MPC kept the CRR at 45% for deposit money banks, 16% for merchant banks, and 75% for non-TSA public-sector deposits, setting the Standing Lending Facility at 23.50% and the Standing Deposit Facility at 20%. Will you consider reallocating part of your portfolio from fixed-income assets to equities to take advantage of the lower policy rate and potential equity upside, or will you wait to see how quickly cheaper lending translates into stronger corporate earnings?