The Central Bank of Nigeria (CBN) has retained its benchmark Monetary Policy Rate (MPR) at 26.5 percent for the second consecutive meeting, maintaining its cautious approach to tackling inflation and ensuring exchange rate stability.
The decision was announced after the Monetary Policy Committee (MPC) concluded its two-day meeting in Abuja. The committee also left other key monetary policy parameters unchanged, including the Cash Reserve Ratio (CRR), liquidity ratio, and the asymmetric corridor around the MPR.
CBN Governor Olayemi Cardoso said the committee unanimously agreed to keep the interest rate steady, noting that while inflation has continued to moderate, external economic shocks have delayed the pace of progress toward the bank’s long-term target of achieving single-digit inflation.
He explained that the recent decline in headline inflation indicates that the monetary policies implemented over the past months are beginning to deliver positive results, despite ongoing global and domestic challenges.
Latest official figures showed that Nigeria’s headline inflation eased slightly to 15.91 percent in June, down from 15.93 percent in May. However, food inflation increased to 17.52 percent, driven by supply chain challenges and rising transportation costs.
Economic analysts largely expected the CBN to maintain its current monetary stance, arguing that inflation remains vulnerable to both domestic and international risks. They noted that the decision demonstrates the apex bank’s determination to consolidate recent gains in inflation control and exchange rate stability before considering any reduction in interest rates.
Financial analyst Bismarck Rewane described the move as a prudent strategy, saying the CBN is avoiding the risk of easing monetary policy too early, which could reverse the progress already made in reducing inflation.
He added that the stability of the naira, stronger external reserves and improved money supply indicators suggest gradual economic improvement, although geopolitical tensions and global commodity price volatility continue to pose inflationary risks.
Similarly, Nnamdi Nwaizu of Comercio Partners said financial markets had already anticipated the decision, meaning little market reaction was expected. He noted that the current interest rate environment continues to attract foreign investment into Nigeria’s fixed-income market while supporting returns for local investors.
According to him, many manufacturers now prioritise exchange rate stability over lower borrowing costs, as a stable currency provides greater certainty for business operations and financial planning.
The MPC’s decision also reflects concerns that election-related spending, seasonal import demand and global economic uncertainties could sustain inflationary pressures in the coming months.
Across Africa, monetary policy trends remain mixed. While countries such as Ethiopia, Tanzania, Namibia, Rwanda and South Africa have raised interest rates to combat inflation, others including Morocco, Kenya, Egypt, Uganda, Botswana, Tunisia and Mozambique have opted to keep rates unchanged as they assess economic conditions and inflation trends.
