The Central Bank of Nigeria (CBN) has retained the Monetary Policy Rate (MPR), otherwise known as the benchmark interest rate, at 26.5 per cent, citing heightened global uncertainties and the need to sustain the gains recorded in the fight against inflation.
The decision was announced on Tuesday by the Governor of the CBN, Olayemi Cardoso, while reading the communiqué of the Monetary Policy Committee (MPC) after its meeting in Abuja.
In addition to retaining the MPR, the MPC left all other key monetary parameters unchanged. It retained the asymmetric corridor around the MPR at +500/-100 basis points, maintained the Cash Reserve Ratio (CRR) for Deposit Money Banks at 45 per cent, Merchant Banks at 16 per cent, and kept the liquidity ratio at 30 per cent.
Cardoso said the committee’s decision followed a careful assessment of domestic economic conditions and emerging global risks, particularly the resurgence of hostilities in the Middle East and their implications for global commodity prices.
According to him, although Nigeria’s headline inflation moderated marginally in June, the evolving geopolitical developments warranted a cautious monetary policy stance.
“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.
“In view of the evolving developments, maintaining a cautious monetary policy stance remains appropriate,” he said.
The committee observed that the renewed conflict in the Middle East could increase global energy prices and trigger imported inflation through higher fuel and transportation costs.
Despite these concerns, the MPC expressed confidence that the Nigerian economy had remained resilient to external shocks due to the fiscal and monetary reforms implemented by the government and the apex bank.
Cardoso explained that retaining the current policy stance would enable the committee to monitor incoming economic data before making further policy adjustments.
The MPC also commended the Federal Government for strengthening coordination between fiscal and monetary authorities, noting that such collaboration had helped moderate the domestic impact of global economic shocks.
According to the committee, greater policy alignment would improve macroeconomic stability and enhance the effectiveness of ongoing economic reforms.
The committee further highlighted the potential benefits of Executive Order 001 and welcomed the government’s renewed efforts to increase crude oil production while urging relevant agencies to accelerate reforms in the solid minerals sector to diversify government revenues.
On the banking sector, the MPC applauded the progress made in the ongoing recapitalisation exercise, saying it had strengthened the resilience of Nigerian banks as reflected in key prudential and financial soundness indicators.
However, it urged the CBN to sustain effective regulatory oversight to safeguard financial system stability.
On inflation, Cardoso disclosed that headline inflation eased slightly to 15.91 per cent in June 2026 from 15.93 per cent in May, ending three consecutive months of increases.
He attributed the moderation to a decline in non-food inflation, which offset continued pressure from food prices.
Food inflation, however, rose to 17.52 per cent in June from 16.96 per cent in May, driven by supply constraints in major food-producing areas and rising transportation costs.
Core inflation, which excludes volatile agricultural produce and energy prices, moderated to 15.92 per cent from 16.82 per cent, largely due to exchange rate stability.
The 12-month average inflation rate also declined to 17.63 per cent from 18.36 per cent, marking the sixth consecutive month of moderation.
On a month-on-month basis, headline inflation slowed to 1.66 per cent in June from 1.75 per cent in May.
The committee also reviewed developments in the real sector, noting that Nigeria’s economy expanded by 3.89 per cent in the first quarter of 2026, compared to 4.07 per cent in the preceding quarter.
The growth was driven largely by the non-oil sector, which recorded 3.94 per cent growth, supported by improvements in telecommunications, financial services, trade, transportation and other services.
Oil sector growth, however, slowed to 2.57 per cent from 6.79 per cent in the fourth quarter of 2025 due to maintenance activities at oil facilities.
The MPC also noted signs of improving business activities, as the Composite Purchasing Managers’ Index (PMI) rose to 50.1 points in June from 49.6 points in May, indicating a return to expansion.
Cardoso further disclosed that Nigeria’s gross external reserves increased to $52.52bn as of July 17, 2026, up from $50.47bn at the end of June.
He attributed the increase to higher receipts from crude oil-related taxes and third-party inflows.
According to him, the reserve level is sufficient to finance approximately 11 months of imports of goods and services, significantly above the international benchmark of three months.
The committee also reviewed the global economic outlook and noted that global growth is projected to slow to 3.0 per cent in 2026 from 3.5 per cent in 2025, reflecting heightened geopolitical tensions, trade policy uncertainties and tight fiscal conditions.
It warned that rising crude oil prices, supply chain disruptions, climate-related shocks, exchange rate volatility and fiscal constraints continue to pose upside risks to global inflation, especially in emerging market economies.
The MPC reaffirmed its commitment to maintaining price stability and pledged to continue monitoring both domestic and international economic developments to ensure that future monetary policy decisions support sustainable economic growth and macroeconomic stability.
ENDS
