CBN holds interest rate at 26.5% as reserves rise to $52.52bn

The Central Bank of Nigeria (CBN) has retained the Monetary Policy Rate (MPR) at 26.5 per cent for a second consecutive meeting, as the country’s external reserves climbed to $52.52 billion and inflation eased marginally, reinforcing the Monetary Policy Committee’s decision to maintain a tight monetary policy stance amid heightened global uncertainties.

The decision was taken at the 306th meeting of the Monetary Policy Committee (MPC), held on July 20 and 21, 2026, with all 11 members voting to retain the benchmark interest rate and other key monetary policy parameters.

Besides retaining the MPR at 26.5 per cent, the committee also maintained the asymmetric corridor around the benchmark rate at +50/-450 basis points, while leaving the Cash Reserve Ratio at 45 per cent for Deposit Money Banks, 16 per cent for Merchant Banks and 75 per cent for non-TSA public sector deposits.

CBN Governor, Mr Olayemi Cardoso, said the committee adopted a cautious approach after assessing both domestic and external risks, particularly the resurgence of hostilities in the Middle East and their potential impact on global energy prices and domestic inflation.

The MPC noted that although Nigeria’s headline inflation moderated slightly to 15.91 per cent in June from 15.93 per cent in May, global uncertainties warranted maintaining the current monetary policy stance to safeguard macroeconomic stability.

The committee observed that while food inflation rose to 17.52 per cent in June from 16.96 per cent in May due to supply constraints, core inflation declined to 15.92 per cent from 16.82 per cent, supported largely by exchange rate stability.

It also highlighted that the 12-month average inflation rate declined for the sixth consecutive month to 17.63 per cent in June from 18.36 per cent in May, while month-on-month headline inflation slowed to 1.66 per cent from 1.75 per cent.

The MPC said Nigeria’s economy remained resilient despite external shocks, with first-quarter Gross Domestic Product expanding by 3.89 per cent, driven mainly by the non-oil sector, which recorded growth of 3.94 per cent on the back of improved performance in telecommunications, financial services, trade, transportation and other services.

Although oil sector growth slowed to 2.57 per cent from 6.79 per cent in the preceding quarter owing to maintenance activities on oil facilities, the committee noted that recent improvements in crude oil production and a rebound in business activity signalled stronger economic momentum.

According to the communiqué, the composite Purchasing Managers’ Index rose to 50.1 points in June from 49.6 points in May, indicating a return to expansion in business activities.

The committee also welcomed the rise in Nigeria’s gross external reserves to $52.52 billion as of July 17, 2026, from $50.47 billion at the end of May, attributing the increase to higher crude oil-related tax receipts and third-party inflows.

The reserves, the committee noted, are sufficient to finance about 11 months of imports of goods and services, well above the international benchmark of three months’ import cover.

The MPC commended the Federal Government’s renewed commitment to policy coordination with the monetary authorities, describing the collaboration as critical to moderating the impact of external shocks and strengthening macroeconomic stability.

It also welcomed the successful banking sector recapitalisation exercise, noting improvements in the resilience of the financial system, while urging the apex bank to sustain effective supervision to preserve financial stability.

Looking ahead, the committee projected that inflation would continue to moderate over the medium term, supported by exchange rate stability, the lagged effects of previous monetary tightening and improved food supply as the harvest season approaches.

However, it warned that prolonged escalation of geopolitical tensions in the Middle East remains the biggest downside risk to both inflation and economic growth.

The next meeting of the Monetary Policy Committee is scheduled for September 21 and 22, 2026.