The Central Bank of Nigeria (CBN) has retained the Monetary Policy Rate (MPR), the country’s benchmark interest rate, at 26.5 per cent for the second consecutive Monetary Policy Committee (MPC) meeting, citing renewed geopolitical tensions in the Middle East and lingering inflationary pressures despite a slight easing in headline inflation.
The decision was announced on Tuesday by the CBN Governor, Olayemi Cardoso, at the end of the 306th MPC meeting in Abuja, attended by all 11 committee members.
Cardoso said the committee unanimously resolved to retain the MPR at 26.5 per cent while leaving all other monetary policy parameters unchanged.
The MPC also retained the asymmetric corridor around the MPR, the Cash Reserve Ratio (CRR) at 45 per cent for Deposit Money Banks, 16 per cent for Merchant Banks, and 75 per cent for non-Treasury Single Account public sector deposits.
The decision follows the committee’s previous rate hold after implementing a 50-basis-point reduction in February 2026.
Although Nigeria’s headline inflation slowed marginally to 15.91 per cent in June 2026 from 15.93 per cent in May, Cardoso said the committee considered the balance of risks and concluded that maintaining the current policy stance remained the most appropriate option.
According to him, renewed hostilities in the Middle East have heightened global uncertainties, particularly through their impact on energy prices and the potential pass-through to domestic inflation.
“The committee’s decision to maintain the current policy stance followed a thorough assessment of the balance of risks. Although headline inflation moderated marginally in June 2026, global uncertainties have heightened due mainly to the renewed hostilities in the Middle East,” Cardoso said.
He noted that the committee carefully assessed the implications of the conflict on global energy prices and their possible effect on Nigeria’s inflation outlook.
Despite these challenges, Cardoso said the Nigerian economy has remained resilient to external shocks, reflecting the gains of reforms implemented by both the fiscal and monetary authorities.
He explained that retaining the current policy stance would enable the MPC to monitor incoming economic data before taking further policy actions.
The CBN governor also commended the Federal Government’s renewed commitment to policy coordination, saying stronger collaboration between fiscal and monetary authorities had helped cushion the domestic impact of global shocks while supporting broader macroeconomic objectives.
The committee further praised the implementation of Executive Order 9, describing it as a step toward strengthening Nigeria’s macroeconomic fundamentals. It also urged the government to sustain efforts to increase crude oil production and accelerate reforms in the solid minerals sector to diversify revenue sources.
The MPC welcomed the outcome of the banking sector recapitalisation exercise, saying it had strengthened the resilience of Nigeria’s financial system, while urging the CBN to maintain effective supervision.
On inflation, Cardoso said the moderation in headline inflation was largely driven by lower core inflation, although food inflation continued to rise.
Food inflation increased to 17.52 per cent in June from 16.96 per cent in May, driven by supply constraints in major food-producing areas and high transportation costs. Core inflation, however, eased to 15.92 per cent from 16.82 per cent, supported mainly by exchange rate stability.
He added that the 12-month average inflation rate declined for the sixth consecutive month to 17.63 per cent in June from 18.36 per cent in May, while month-on-month headline inflation also moderated to 1.66 per cent from 1.75 per cent.
Responding to questions after the meeting, Cardoso reaffirmed the apex bank’s commitment to reducing inflation to single digits despite renewed geopolitical pressures.
He said the recent moderation in inflation indicates that the CBN’s policy measures are producing positive results.
“Headline inflation has moderated. That gives us an indication that the tools we have implemented so far are yielding results,” he said.
Cardoso stressed that continued collaboration between the CBN and the Federal Government remains critical to containing inflation and sustaining macroeconomic stability.
According to him, restoring stability is essential to attracting investment and driving economic growth.
The CBN governor disclosed that Nigeria’s gross external reserves rose to $50.47 billion at the end of May, supported mainly by crude oil-related tax receipts and third-party inflows. He said the reserves are sufficient to finance about 11 months of imports, well above the international benchmark of three months.
He also noted that Nigeria’s real Gross Domestic Product (GDP) expanded by 3.89 per cent in the first quarter of 2026, driven mainly by the non-oil sector, while the Composite Purchasing Managers’ Index improved to 50.1 points in June from 49.6 points in May, signalling renewed expansion in business activity.
On the International Monetary Fund’s assessment that the naira is undervalued, Cardoso said the CBN would continue to support a transparent foreign exchange market rather than target a specific exchange rate.
He maintained that the value of the naira would ultimately depend on stronger economic fundamentals, including higher oil exports, increased foreign direct investment and improved domestic productivity.
Cardoso also defended the recent slowdown in bank lending, describing it as a temporary adjustment following the withdrawal of COVID-19 regulatory forbearance.
He disclosed that 33 of Nigeria’s 37 banks have already met the new recapitalisation requirements, while the remaining institutions remain under close regulatory supervision to achieve compliance.
The CBN governor further said the newly introduced Nigeria Overnight Funding Average (NOFA) would improve transparency in the financial system by replacing judgment-based interbank rates with transaction-based pricing, aligning Nigeria with global best practices.
Looking ahead, Cardoso said economic growth is expected to remain resilient in 2026, supported by improved crude oil production, stronger business activity and ongoing reforms, while inflation is projected to moderate further over the medium term.
However, he warned that the greatest risk to the outlook remains a prolonged escalation of the conflict in the Middle East.
He reiterated that the MPC remains committed to preserving price and financial system stability and will continue to adjust monetary policy in line with evolving economic conditions.
The committee’s next Monetary Policy Committee meeting is scheduled for September 21 and 22, 2026.
