CBN holds benchmark interest rate at 26.5%

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Barbara Bako, Abuja.

The Monetary Policy Committee (MPC) of the Central Bank of Nigeria has retained the Monetary Policy Rate (MPR) at 26.5 per cent, citing the need to sustain price stability amid inflationary pressures and global economic uncertainties.

The decision was reached at the end of the Committee’s 305th meeting held on May 19 and 20, 2026, under the leadership of the Governor of the Central Bank of Nigeria, Olayemi Cardoso.

The Committee also retained the asymmetric corridor around the MPR at +50/-450 basis points, while leaving the Cash Reserve Requirement for Deposit Money Banks at 45 per cent, Merchant Banks at 16 per cent, and non-TSA public sector deposits at 75 per cent.

According to the MPC communiqué, members considered recent increases in inflation to be largely temporary and linked to external shocks, particularly the impact of the Middle East crisis on energy prices, transportation costs and logistics.

The Committee, however, expressed confidence that existing macroeconomic reforms, including exchange rate stability, stronger external reserves, fiscal consolidation and banking sector resilience, would help contain inflationary pressures.

The MPC noted that headline inflation rose slightly to 15.69 per cent in April 2026 from 15.38 per cent in March, while food inflation climbed to 16.06 per cent due to higher transportation and logistics costs.

Core inflation, however, moderated to 15.86 per cent from 16.21 per cent recorded in March.

The Committee also highlighted improvements in key economic indicators, noting that Nigeria’s real Gross Domestic Product grew by 4.07 per cent in the fourth quarter of 2025, driven by expansion in the oil, agriculture and services sectors.

It further disclosed that gross external reserves increased to $49.49 billion as of May 15, 2026, compared to $48.35 billion at the end of March, strengthening investor confidence and supporting exchange rate stability.

The MPC welcomed the recent sovereign rating upgrade and the successful completion of the banking recapitalisation exercise, which it said resulted in 33 stronger and better-capitalised banks.

Looking ahead, the Committee projected that economic growth would remain resilient despite global uncertainties, while inflation is expected to moderate gradually as the effects of previous policy tightening measures continue to materialise.