CBN maintains interest rate as MPC moves to tame inflation

By Philippine Duru

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The Central Bank of Nigeria (CBN) has retained the country’s benchmark interest rate, known as the Monetary Policy Rate (MPR), at 26.5 percent following the conclusion of the 305th Monetary Policy Committee (MPC) meeting held in Abuja on May 19 and 20, 2026.

The decision reflects the apex bank’s cautious approach toward managing inflationary pressures and maintaining stability in the Nigerian economy amid persistent global and domestic economic uncertainties.

CBN Governor, Olayemi Cardoso, announced the committee’s resolutions during a press briefing after the meeting on Wednesday, stating that all key monetary policy indicators were left unchanged.

According to Cardoso, the MPC resolved to retain the Monetary Policy Rate at 26.5 percent, while also maintaining the asymmetric corridor around the MPR at +50 and -450 basis points. The committee further retained the Cash Reserve Ratio at 45 percent for Deposit Money Banks and 16 percent for Merchant Banks. The liquidity ratio was equally maintained at 30 percent.

The committee explained that the decision was necessary to sustain ongoing efforts aimed at reducing inflation and stabilizing the foreign exchange market. Members noted that although inflationary trends are beginning to show signs of moderation, the overall price environment remains challenging, especially due to rising food and energy costs.

Cardoso stated that the MPC adopted a wait-and-see approach to allow previous policy measures to continue yielding positive results within the economy. He noted that maintaining the current monetary stance would help preserve investor confidence, support exchange rate stability, and strengthen the impact of ongoing economic reforms introduced by the Federal Government and the apex bank.

The committee also acknowledged improvements in Nigeria’s external reserves and relative calm in the foreign exchange market compared to previous periods. However, it warned that global economic conditions remain fragile due to geopolitical tensions, weaker global growth outlooks, and fluctuations in international commodity prices, all of which could pose risks to Nigeria’s economic recovery.

Ahead of the meeting, several economists and financial analysts had projected that the MPC would likely retain rates in order to balance inflation control with economic growth considerations. Many market watchers argued that an aggressive rate hike could further weaken business activities and borrowing conditions, while a rate cut could increase pressure on the naira and worsen inflation.

Analysts in the financial sector say the decision to hold rates steady may provide reassurance to investors and help maintain stability across the fixed income, banking, and foreign exchange markets.

The MPC reaffirmed its commitment to implementing data-driven monetary policies and assured that it would continue to closely monitor developments in both the domestic and global economy before making future policy adjustments.