CBN retains interest rate at 26.5%

The Central Bank of Nigeria (CBN) has retained its monetary policy rate (MPR) at 26.5 percent, as the Monetary Policy Committee (MPC) adopts a cautious approach amid inflationary pressures and global economic uncertainties.

CBN Governor Olayemi Cardoso announced the decision on Tuesday following the conclusion of the committee’s 306th meeting in Abuja.

The latest decision marks the second time in 2026 that the MPC has maintained the benchmark interest rate without adjustment.

The committee also retained other key monetary policy parameters, including the asymmetric corridor at +500/-100 basis points around the MPR, the cash reserve ratio (CRR) at 40.5 percent for deposit money banks and 16 percent for merchant banks, while keeping the liquidity ratio at 30 percent.

Cardoso said the decision was based on the need to monitor economic developments and assess incoming data before considering any further policy changes.

“The committee’s decision to maintain the current policy stance followed a thorough assessment of the balance of risks,” the CBN governor said.

He noted that although headline inflation eased slightly in June 2026, global uncertainties, particularly renewed tensions in the Middle East, continued to pose risks to price stability.

“Maintaining a cautious monetary policy stance remains appropriate,” Cardoso said.

The MPC chairman added that geopolitical developments could further increase inflationary pressures, but said Nigeria’s economy had continued to show resilience due to reforms implemented by fiscal and monetary authorities.

Cardoso also highlighted improved coordination between the federal government and the CBN, saying stronger alignment between fiscal and monetary policies would help improve macroeconomic stability.

The committee also acknowledged progress from the banking sector recapitalisation exercise, noting improvements in the resilience of financial institutions as reflected in key prudential indicators.

According to the CBN governor, the MPC expects inflation to continue declining but warned that a prolonged escalation of conflict in the Middle East remains a major risk to the economic outlook.

The committee also called for continued supervision of banks to safeguard financial stability and manage emerging risks within the financial system.

The decision comes after Nigeria’s inflation rate declined to 15.91 percent in June 2026, marking the first drop recorded in three months.

Ahead of the MPC meeting, some economists had urged the apex bank to maintain the current interest rate, citing renewed pressure from rising food prices.

Muda Yusuf, chief executive officer of the Centre for the Promotion of Private Enterprise (CPPE), said that while headline inflation and core inflation had shown signs of moderation, food prices were beginning to rise again.