CBN retains Monetary Policy Rate at 26.5%, maintains all key policy parameters

Nike Popoola

The Monetary Policy Committee (MPC) of the Central Bank of Nigeria has retained the Monetary Policy Rate (MPR) at 26.5 per cent following its 305th meeting held on Tuesday and Wednesday, today.

The Committee also maintained all other policy parameters, including the Standing Facilities Corridor around the MPR at +50/-450 basis points. The Cash Reserve Requirement (CRR) was retained at 45.00 per cent for Deposit Money Banks, 16.00 per cent for Merchant Banks, and 75.00 per cent for non-TSA public sector deposits.

The communiqué was presented by the Governor of the Olayemi Cardoso at the end of the meeting today.

Eleven members of the Committee were in attendance at the meeting, which reviewed recent global and domestic economic developments and assessed the near-to-medium-term outlook.

According to the MPC, the decisions were based on a comprehensive assessment of risks to the economic outlook. The Committee noted that although inflation had risen marginally for two consecutive months due largely to external shocks, the increase was considered transitory. It expressed confidence that the current macroeconomic environment remains strong enough to support a return to disinflation.

The MPC highlighted spillover effects from the ongoing Middle East crisis, which have contributed to rising energy prices as well as higher transportation and logistics costs. However, it observed that the impact on the Nigerian economy has been largely contained, attributing this to prior policy reforms.

These reforms, the Committee noted, include exchange rate stability, improved external reserves, a strengthened monetary policy transmission mechanism, a well-capitalised banking system, and ongoing fiscal consolidation efforts. According to the MPC, these measures have significantly enhanced the economy’s resilience to external shocks and reduced the pass-through of global commodity price increases to domestic inflation.

The Committee also welcomed the recent sovereign rating upgrade despite prevailing global headwinds, describing it as an endorsement of Nigeria’s macroeconomic fundamentals, reform trajectory, and policy credibility. It stressed the need for a cautious and vigilant monetary stance to anchor inflation expectations and preserve macroeconomic stability.

In addition, the MPC commended the successful conclusion of the banking sector recapitalisation exercise, which resulted in the emergence of 33 stronger banks with improved financial soundness indicators. It urged the CBN to remain proactive in addressing potential post-recapitalisation risks to safeguard financial system stability.

On domestic price developments, the Committee reported that headline inflation (year-on-year) rose marginally to 15.69 per cent in April 2026, from 15.38 per cent in March. The increase was driven largely by higher food prices, which climbed to 16.06 per cent from 14.31 per cent over the same period, reflecting elevated transportation and logistics costs as well as seasonal factors.

Core inflation, however, eased to 15.86 per cent in April from 16.21 per cent in March. The 12-month average inflation also declined for the sixth consecutive month to 19.16 per cent from 20.05 per cent.

Month-on-month inflation showed a sharper moderation, easing to 2.13 per cent in April compared with 4.18 per cent in March, reflecting improvements in both food and core inflation components.

On output, the MPC noted that real GDP grew by 4.07 per cent in Q4 2025, up from 3.98 per cent in the previous quarter, driven by expansions in the industry and agriculture sectors. The non-oil sector grew by 3.99 per cent, supported by information and communication as well as transportation and storage activities. The oil sector also recorded stronger growth of 6.79 per cent, supported by improved refining activities in the downstream sector.

External reserves remained robust at US$49.49 billion as of May 15, 2026, compared with US$48.35 billion recorded at the end of March 2026. The level of reserves is sufficient to cover 9.04 months of imports for goods and services, reinforcing investor confidence and supporting exchange rate stability.

On global developments, the Committee noted that global growth is expected to moderate in 2026 due to geopolitical tensions, energy market disruptions, and tighter financial conditions. It also projected that global inflation may edge higher in the near term due to rising energy and agricultural prices as well as ongoing supply chain disruptions.

Looking ahead, the MPC stated that Nigeria’s output growth is expected to remain resilient in 2026, despite downside risks linked to the Middle East conflict. It added that previous monetary tightening, exchange rate stability, and improved food supply conditions are expected to support a gradual return to disinflation.
The Committee reaffirmed its commitment to a forward-looking, evidence-based monetary policy framework aimed at achieving price stability while maintaining financial system stability.

The next meeting of the MPC is scheduled for July 20 and 21, 2026, Cardoso disclosed.