CBN keeps interest rate steady at 26.5%

The Central Bank of Nigeria (CBN) has kept the benchmark interest rate at 26.5 percent. This decision comes as the bank remains cautious amid rising inflation.

CBN Governor Olayemi Cardoso announced this decision after the bank's two-day Monetary Policy Committee (MPC) meeting. The meeting took place from July 20 to 21 in Abuja.

This is the second time in a row that the Monetary Policy Rate (MPR) has been held at 26.5 percent. This follows a 50-basis-point cut in February, when it was reduced from 27 percent. After the meeting, Governor Cardoso explained that the decision was made after a careful review of the economy.

"The MPC decision followed a thorough assessment of the balance; although headline inflation moderated marginally in June 2026, it has heightened due to renewed hostilities in the Middle East," Mr Cardoso said.

Changes in Facilities and Ratios

The MPC also changed the asymmetric facilities corridor around the MPR to +50/-450 basis points. This move aims to discourage banks from holding idle funds with the CBN and to boost lending into the economy. Additionally, the committee kept the Cash Reserve Ratio (CRR) for commercial banks at 45 percent. The rate for merchant banks remains at 16 percent, while the CRR on non-TSA public-sector deposits stays at 75 percent for liquidity management.

The interest rate remained unchanged after Nigeria’s headline inflation rate slightly dropped to 15.91 percent in June. This is down from 15.93 percent in May, according to the National Bureau of Statistics (NBS).

The headline inflation rate in Nigeria had been increasing since March. It rose for several months, reaching 15.93 percent in May, up from 15.69 percent in April and 15.38 percent in March. The rise in inflation was linked to the worsening conflict in the Middle East, which began in February and caused global oil prices to rise.

While a temporary ceasefire helped lower global oil prices and slowed inflation in June, renewed conflicts involving the U.S. and Iran have increased tensions again around the Strait of Hormuz.