CBN Retains Interest Rate at 26.5% Amid Inflation Concerns, Global Uncertainty
Oru Leonard
The Central Bank of Nigeria (CBN), has retained the Monetary Policy Rate (MPR), at 26.5 per cent following the conclusion of the 305th meeting of its Monetary Policy Committee (MPC), held on May 19 and 20, 2026.
CBN Governor, Olayemi Cardoso, announced the decision on Wednesday, saying the committee opted to maintain a cautious policy stance in response to prevailing domestic and global economic conditions.
According to the MPC, all 11 members in attendance unanimously agreed to retain the benchmark interest rate at 26.5 per cent while also keeping other monetary parameters unchanged. The Standing Facilities Corridor was retained at +50/-450 basis points around the MPR, while the Cash Reserve Requirement (CRR) remained at 45 per cent for Deposit Money Banks, 16 per cent for Merchant Banks, and 75 per cent for non-TSA public sector deposits.
The Committee explained that although inflation rose marginally for the second consecutive month, the increase was largely driven by temporary external shocks, particularly the spillover effects of the Middle East crisis, which has pushed up energy prices, transportation costs and logistics expenses globally.
Despite these pressures, the MPC expressed confidence that Nigeria’s macroeconomic reforms have strengthened the economy’s resilience against external shocks. The Committee cited exchange rate stability, stronger external reserves, improved monetary policy transmission, fiscal consolidation and a well-capitalised banking system as major factors helping to cushion the economy.
The MPC also welcomed the recent sovereign credit rating upgrade for Nigeria, describing it as a reflection of improving macroeconomic fundamentals and growing confidence in the country’s economic reforms.
The Committee further commended the successful completion of the banking recapitalisation exercise, which resulted in the emergence of 33 stronger banks with improved financial soundness indicators capable of supporting economic growth.
On inflation trends, the MPC noted that headline inflation rose slightly to 15.69 per cent in April 2026 from 15.38 per cent in March, mainly due to increases in food prices. Food inflation climbed to 16.06 per cent from 14.31 per cent, while core inflation moderated to 15.86 per cent from 16.21 per cent.
However, the Committee highlighted signs of easing inflationary pressure, noting that month-on-month inflation slowed significantly to 2.13 per cent in April from 4.18 per cent in March, while the 12-month average inflation rate declined for the sixth consecutive month to 19.16 per cent.
The MPC also pointed to improvements in economic growth, with Nigeria’s real Gross Domestic Product (GDP) expanding by 4.07 per cent in the fourth quarter of 2025, compared to 3.98 per cent in the previous quarter. Growth was driven by strong performances in agriculture, industry and services sectors, while the oil sector recorded improved refining activities.
External reserves also remained strong at 49.49 billion dollars as of May 15, 2026, up from 48.35 billion dollars at the end of March, providing import cover of more than nine months and helping to sustain exchange rate stability.
Looking ahead, the Committee projected that economic growth would remain resilient in 2026 despite uncertainties arising from geopolitical tensions and global economic pressures. It added that inflation is expected to rise moderately in the short term but should gradually return to a downward path due to previous monetary tightening measures, stable exchange rates and improving food supply.
The MPC reaffirmed its commitment to maintaining a forward-looking and evidence-based monetary policy framework focused on price stability and safeguarding the resilience of Nigeria’s financial system.
The next MPC meeting is scheduled for July 20 and 21, 2026.
