CBN holds interest rate at 26.5% amid Middle East tensions
The Central Bank of Nigeria has retained the Monetary Policy Rate at 26.5 percent, marking the second consecutive decision to leave interest rates unchanged in 2026.
The Central Bank of Nigeria (CBN) has retained the Monetary Policy Rate (MPR) at 26.5 percent following the Monetary Policy Committee’s 306th meeting in Abuja, marking the second consecutive decision to leave interest rates unchanged in 2026. CBN Governor Olayemi Cardoso said the committee also maintained the asymmetric corridor at +500/-100 basis points, the Cash Reserve Ratio at 40.5 percent for deposit money banks and 16 percent for merchant banks, while keeping the liquidity ratio at 30 percent.
Cardoso said the decision reflected a cautious approach as the committee assesses incoming economic data amid heightened global uncertainty caused by renewed Middle East tensions. While noting that Nigeria’s inflation eased to 15.91 percent in June, he warned that geopolitical risks could reverse the trend. The MPC also praised improved coordination between fiscal and monetary authorities and welcomed progress in bank recapitalisation, while reaffirming its commitment to price stability and financial sector resilience.
The decision to hold rates reflects the MPC’s cautious approach. The committee is balancing the need to support economic growth with the need to control inflation. The easing of inflation to 15.91 percent is a positive sign, but the MPC is concerned that the Middle East tensions could push prices higher again.
This echoes the 2023 monetary policy stance, when the MPC also held rates steady amid global uncertainty. The mechanism then was different, but the result was the same: a central bank prioritising stability over growth.
The winners: savers, who benefit from high interest rates; and the CBN, which is maintaining its credibility. The losers: businesses, which face high borrowing costs; and the Nigerian economy, which needs lower rates to stimulate growth.
Bottom Line: The CBN has held interest rates at 26.5 percent. Inflation is easing, but the Middle East is burning. The central bank is waiting. The question is whether the wait will be worth it.