CBN retains interest rate at 26.5% to tame price pressures

The Central Bank of Nigeria (CBN) on Tuesday retained its benchmark Monetary Policy Rate (MPR) at 26.5 percent, delivering a widely expected decision aimed at safeguarding price and exchange rate stability amid persistent inflationary pressures and heightened global uncertainty.

Announcing the outcome of the two-day Monetary Policy Committee (MPC) meeting, Olayemi Cardoso, governor of the CBN, said members unanimously agreed to leave the policy rate unchanged as they weighed the risks posed by global developments, particularly uncertainties surrounding the United States economy and the ongoing conflict in the Middle East.

The committee’s decision underscores its cautious approach to balancing the fight against inflation with the need to sustain economic recovery while anchoring market expectations.

The MPC’s decision was in line with expectations, as all analysts polled by BusinessDay had forecast that the committee would maintain its tight monetary policy stance.

Analysts argued that despite headline inflation easing marginally to 15.91 percent in June after three consecutive monthly increases, the moderation was insufficient to warrant a rate cut given lingering risks from exchange rate volatility, elevated food and energy prices, and geopolitical tensions.

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Ahead of the meeting, analysts had also pointed to renewed pressure on the naira as another reason for the CBN to remain cautious.

The widening gap between the official and parallel market exchange rates reinforced the case for keeping borrowing costs elevated to support the local currency and preserve investor confidence.

The decision reflects the Central Bank’s resolve to maintain monetary discipline until there is clearer evidence that inflation is on a sustained downward path.

By holding rates steady, the MPC signalled that protecting price stability and preserving gains in the foreign exchange market remain its immediate priorities despite growing expectations for monetary easing later in the year.

Hope Moses-Ashike

Hope Moses-Ashike is an Associate Editor, Banking and Finance, with more than a decade of experience reporting on Nigeria’s financial system and broader economy. She closely tracks market movements, monetary policy decisions, company disclosures, regulatory actions, economic indicators, and global developments, and interprets what they mean for businesses, investors, policymakers, and households. Her reporting helps readers understand complex issues such as inflation trends, foreign exchange market dynamics, interest rate decisions, bank performance, and investment risks. She also covers major international events and periodically travels to Washington, D.C., to report on the World Bank/IMF Spring and Annual Meetings. Her dedication to financial journalism has earned her multiple recognitions and invitations to high-level professional development programmes. She is an alumna of the International Visitors Leadership Programme (IVLP) in the United States and holds an Advanced Financial Journalism Certificate from the Press Association Training in London, UK. Her other notable achievements include completing the Lagos Business School CMC Programme, the Bloomberg Media Africa Initiative Programme, and a Master Class in Journalism at Rhodes University in South Africa.