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The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) on Tuesday retained the Monetary Policy Rate (MPR) at 26.5 percent, citing heightened geopolitical tensions in the Middle East and the need to sustain a cautious monetary policy stance despite easing inflation.
The decision was taken at the committee’s 306th meeting held on July 20 and 21, 2026, where all 11 members voted to keep key monetary parameters unchanged.
Besides retaining the benchmark interest rate at 26.5 percent, the MPC also maintained the asymmetric corridor around the MPR at +50/-450 basis points, the Cash Reserve Requirement (CRR) for deposit money banks at 45 percent, merchant banks at 16 percent, and non-TSA public sector deposits at 75 percent.
The committee said although Nigeria’s inflation rate moderated slightly in June, growing uncertainties arising from renewed hostilities in the Middle East pose fresh risks to global energy prices and domestic inflation.
According to the communiqué, maintaining the current policy stance would allow the bank to closely monitor incoming economic data and assess the inflation trajectory before making further policy adjustments.
The MPC noted that while the conflict in the Middle East could have spillover effects on energy prices, the Nigerian economy has remained largely resilient due to earlier fiscal and monetary reforms undertaken by the government and the CBN.
The committee also acknowledged the Federal Government’s renewed commitment to stronger policy coordination with the monetary authority, saying closer alignment between fiscal and monetary policies would improve policy effectiveness and support broader macroeconomic objectives.
It further highlighted the potential benefits of Executive Order 9, while commending ongoing efforts to improve crude oil production and urging relevant agencies to deepen reforms in the solid minerals sector to diversify government revenue.
On the financial sector, the MPC welcomed the successful outcome of the banking sector recapitalisation exercise, describing it as a positive development that has strengthened the resilience of the banking system. However, it urged the CBN to sustain effective supervision to safeguard financial stability.
The committee observed that headline inflation eased marginally to 15.91 percent in June 2026, from 15.93 percent in May, ending three consecutive months of increases.
While food inflation rose to 17.52 percent from 16.96 percent due to supply constraints, core inflation declined to 15.92 percent from 16.82 percent, largely supported by exchange rate stability.
The 12-month average inflation rate also fell to 17.63 percent in June from 18.36 percent in May, marking the sixth consecutive month of moderation.
Economic growth, however, slowed slightly, with real Gross Domestic Product (GDP) expanding by 3.89 percent in the first quarter of 2026, compared with 4.07 percent in the previous quarter. Growth was driven mainly by the non-oil sector, while oil sector expansion weakened because of maintenance activities at oil facilities.
The MPC noted signs of improving business activity, with the Purchasing Managers’ Index (PMI) rising to 50.1 points in June from 49.6 points in May, indicating a return to expansion.
Nigeria’s gross external reserves also increased to $52.52 billion as of July 17, 2026, up from $50.47 billion at the end of May, providing import cover of about 11 months, well above the international benchmark.
Looking ahead, the committee projected that inflation would continue to moderate in the medium term, supported by exchange rate stability, the delayed impact of previous monetary tightening, and improved food supply as the harvest season approaches.
However, it warned that a prolonged escalation of the Middle East conflict remains the biggest threat to both inflation and economic stability, pledging that the bank stands ready to take appropriate policy measures as macroeconomic conditions evolve.
