Nigeria Holds Interest Rate at 26.5% Amid Inflation Concerns

Nigeria's Monetary Policy Committee (MPC) recently held its benchmark interest rate at 26.5 percent, a decision aimed at tackling the nation's persistent inflation. The Central Bank of Nigeria (CBN) Governor, Olayemi Cardoso, acknowledged a marginal inflation increase over two months but characterized it as a temporary effect of external shocks. He expressed confidence that the current macroeconomic environment, bolstered by prior policy reforms, would guide the country back to a disinflationary trend.

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although inflation has increased marginally for two consecutive months, the committee believes the trend is temporal and largely caused by external shocks.

The committee anticipates that global pressures from the Middle East crisis, which have driven up energy and transportation costs, will eventually ease. They noted that the Nigerian economy's impact from this crisis has been minimal due to existing policy reforms. However, inflation remains a significant concern affecting households, manufacturers, and businesses, disrupting planning and eroding purchasing power.

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the current macroeconomic environment will return the country to disinflationary trend in due course based on a comprehensive assessment of risks to the outlook.

Official data from the National Bureau of Statistics indicates Nigeria's headline inflation rate rose to 15.69 percent year-on-year in April 2026, up from 15.38 percent in March. This increase was primarily driven by higher food, transportation, and logistics costs. While this figure represents a substantial decrease from the 34 percent peak in 2024, ongoing structural issues, foreign exchange instability, and imported energy price shocks continue to hinder the CBN's objective of achieving a six to nine percent inflation range. The path to single-digit inflation remains a difficult challenge for Nigeria.

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the MPC recognises its transitory nature and remains confident that the current macroeconomic environment is sufficiently robust to support a return to disinflation.