Nigeria's central bank cuts benchmark rate to 23% in surprise move

Nigeria's central bank lowered its benchmark lending rate to 23% from 26.50% on Tuesday, a surprise decision it said was intended to strengthen the transmission of monetary policy.

The move defied market expectations. All seven economists surveyed ahead of the meeting had forecast that the Central Bank of Nigeria would keep the rate unchanged for a third consecutive policy meeting.

Speaking at a press conference, Governor Olayemi Cardoso described the cut as "an operational reset to enhance the effectiveness of monetary policy and support the transition to an inflation targeting framework".

The Monetary Policy Committee, in reaching its decision, observed that market rates had drifted away from the benchmark lending rate, weakening the impact of its policy stance, Cardoso said.

Headline inflation in Africa's most populous nation has moderated slightly since the committee's last meeting in July. However, that easing may prove short-lived, with domestic fuel prices having climbed to record highs.