The Monetary Policy Committee of the Central Bank of Nigeria on Wednesday retained the benchmark interest rate at 26.5 per cent, citing rising external risks, renewed inflationary pressure, and the need to sustain exchange rate stability…READ FULL; ORIGINAL POST; FROM SOURCE.
The CBN Governor, Olayemi Cardoso, announced the decision at the end of the committee’s 305th meeting held in Abuja. He said, “The committee’s decision is as follows: retain the monetary policy rate at 26.5 per cent.”
The decision also elicited mixed reactions from members of the Organised Private Sector. They acknowledged the justification for retaining interest rates and, on the other hand, cautioned that high rates hamper private sector investment in SMEs and manufacturing, leading to lower output and hampering job creation.
The committee also retained the standing facilities corridor around the MPR at +50/-450 basis points, the Cash Reserve Requirement of Deposit Money Banks at 45 per cent, Merchant Banks at 16 per cent, and non-TSA public sector deposits at 75 per cent.
The decision came after Nigeria’s headline inflation rose for the second consecutive month to 15.69 per cent in April 2026 from 15.38 per cent in March, according to the latest Consumer Price Index report released by the National Bureau of Statistics.
Food inflation also increased to 16.06 per cent in April from 14.31 per cent in March, reflecting higher transportation and logistics costs as well as seasonal pressures, while core inflation moderated to 15.86 per cent from 16.21 per cent.
The MPC said the renewed inflationary pressure was largely caused by external shocks, particularly spillovers from the Middle East crisis, which had pushed up global energy prices and logistics costs.
However, the committee said the impact on Nigeria had been muted by earlier reforms, including exchange rate stability, improved external reserves, stronger monetary policy transmission, a better-capitalised banking system, and ongoing fiscal consolidation.
It said, “Although inflation has risen marginally for two consecutive months, largely induced by external shocks, the MPC recognised its transitory nature and remained confident that the current macroeconomic environment is sufficiently robust to support a return to disinflation.”
Speaking during the post-meeting press briefing, Cardoso said the CBN would sustain its current policy direction, noting that the country had recorded 11 straight months of disinflation before the recent uptick.
“We’ve got to remember that we’ve been coming from 11 straight months of disinflation. And we believe that what we have now is something that has resulted from external shocks,” he said.
He added that the apex bank had built buffers to protect the economy, saying Nigeria’s recent sovereign rating upgrade by Standard & Poor’s showed that current policies were moving the economy in the right direction.
According to him, exchange rate stability remains central to the CBN’s inflation-control strategy. “It is key that the centrepiece of our toolkit is ensuring that our foreign exchange rate remains stable,” Cardoso said, adding that the bank would continue to work with fiscal authorities to reduce inflation pass-through.
On the foreign exchange market, the governor dismissed claims that the CBN was aggressively intervening to defend the naira. “The answer is that it’s not true,” he said. “The foreign exchange system has changed considerably.”
Cardoso said daily foreign exchange turnover had risen from about $100m when the current administration took office to roughly $550m, with occasional spikes to $1bn. He said the CBN’s intervention in 2025 was only about 1.2 to 1.3 per cent of total market turnover, adding that the market was increasingly being driven by willing buyers and willing sellers.
The governor also said Nigeria’s external reserves remained dynamic and resilient, despite recent concerns over declines in reserve levels. The MPC communiqué showed that gross external reserves stood at $49.49bn as of May 15, 2026, compared with $48.35bn at the end of March, providing 9.04 months of import cover.
Cardoso said some reserve movements reflected normal payments for government obligations and loans, but added that new inflows were also coming in.
Addressing the new foreign exchange manual, the apex bank chief said the document, which became effective on June 1, was part of ongoing reforms to deepen transparency and improve market confidence.
He said the last major revision was done in 2017, adding that the new manual would make it easier for exporters to repatriate foreign exchange earnings and access their funds without unnecessary restrictions.
OPS reacts
In separate phone interviews with The PUNCH, business leaders expressed more cautiousness. They backed the retention as a necessary move to shield the economy from instability linked to tensions in the Middle East and election-related inflation risks. In the same vein, they argued that the high borrowing cost would further weaken small businesses and deepen poverty.
President of the Lagos Chamber of Commerce and Industry, Leye Kupoluyi, explained that while the Chamber acknowledges market expectations for a rate cut to ease credit conditions and stimulate growth, it recognises that persistent inflationary pressures justify policy prudence at this stage.
He warned that “an elevated interest rate continues to constrain private sector investment, especially SMEs and manufacturing, thereby weighing on output and job creation.”
The LCCI described the 26.5 per cent rate as “A necessary stance to anchor inflation expectations, given the rise in headline inflation to 15.69 per cent in April 2026 from 15.38 per cent in March.”
Kupoluyi concluded that LCCI would continue to constructively support the apex bank as it “firmly calls for a clear, data-driven path toward gradual monetary easing once disinflation becomes sustained and exchange rate stability is reinforced.”
On his part, the Deputy President of the National Association of Small-Scale Industrialists, Segun Kuti-George, described the decision as appropriate given prevailing uncertainties.
