UPDATED: CBN holds benchmark interest rate at 26.5% again

Nigeria's Monetary Policy Committee (MPC) has once again held the benchmark interest rate at 26.5 percent, marking the second consecutive meeting without a change. The decision, announced by CBN Governor Olayemi Cardoso, reflects concerns over heightened geopolitical tensions in the Middle East and ongoing inflationary pressures, despite a marginal decrease in domestic inflation.

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The committee’s decision to maintain the current policy stance followed a thorough assessment of the balance of risks. Although headline inflation moderated marginally in June 2026, global uncertainties have heightened due mainly to the renewed hostilities in the Middle East. In view of the evolving developments, maintaining a cautious monetary policy stance remains appropriate.

Cardoso stated that the committee unanimously decided to retain the Monetary Policy Rate (MPR) at 26.5 percent. Other key rates were also held steady: the standing facilities corridor around the MPR, the Cash Reserve Ratio at 45 percent for Deposit Money Banks and 16 percent for Merchant Banks, and 75 percent for non-Treasury Single Account public sector deposits. This decision follows a previous hold after a 50-basis-point cut in February 2026.

The MPC's decision comes even as Nigeria's headline inflation rate saw a slight easing to 15.91 percent in June 2026, down from 15.93 percent in May. This marks the first decline after three consecutive months of increases. However, the committee emphasized that global uncertainties, particularly the renewed hostilities in the Middle East, necessitated a cautious approach.

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In arriving at its decision, the committee noted the recent resurgence of hostilities in the Middle East, with particular attention to its spillover effects on global energy prices and the potential pass-through to domestic inflation.

"In view of the evolving developments, maintaining a cautious monetary policy stance remains appropriate," Cardoso explained. He highlighted the committee's careful assessment of the Middle East conflict's potential spillover effects on global energy prices and its possible impact on domestic inflation. Despite these external factors, Cardoso noted that the Nigerian economy has shown resilience to external shocks, attributing this to reforms implemented by both fiscal and monetary authorities. Retaining the current policy stance aims to allow the CBN to monitor incoming economic data and assess inflation trends before considering further adjustments.

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Available evidence suggests that the Nigerian economy has remained largely resilient to the external shocks, reflecting the gains from prior reforms implemented by the fiscal and monetary authorities.