The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN), in its 305th meeting, resolved to retain the benchmark interest rate, the Monetary Policy Rate (MPR), at 26.5 percent. This decision, announced by CBN Governor Mr. Olayemi Cardoso at the conclusion of the two-day meeting in Abuja, also included keeping the standing facilities corridor around the MPR at +50/-450 basis points. Furthermore, other primary policy parameters remained unchanged, with the Cash Reserve Requirement (CRR) for Deposit Money Banks (DMBs) at 45 percent, merchant banks at 16 percent, and non-TSA public sector deposits at 75 percent. All eleven members of the committee attended the meeting, reviewing recent global and domestic economic developments and assessing the near-to-medium-term outlook.

Governor Cardoso explained that the decision to hold the policy rate was anchored on a comprehensive assessment of the risks to the outlook. Despite a marginal rise in headline inflation for two consecutive months, the MPC recognized its transitory nature, largely induced by external shocks. The committee expressed confidence that the current macroeconomic environment was sufficiently robust to support a return to disinflation, maintaining that essential conditions for price stability remained firmly in place.

A key factor considered by the MPC was the spillover from the Middle East crisis, which has exerted upward pressure on energy prices, transportation costs, and logistics globally. However, available evidence indicated that the impact of this crisis on the Nigerian economy had been largely muted. This resilience is attributed to the benefits of prior policy reforms, which include exchange rate stability, improvements in external reserve buffers, strengthened monetary policy transmission, a well-capitalized banking system, and ongoing fiscal consolidation. These interventions have significantly enhanced the economy’s ability to absorb external shocks, mitigating the pass-through of global commodity and energy price shocks to domestic inflation.

Regarding inflation figures, headline inflation, year-on-year, rose marginally for the second consecutive month to 15.69 percent in April 2026, from 15.38 percent in the preceding month. This increase was primarily driven by the food component, with food inflation rising to 16.06 percent in April 2026, from 14.31 percent in March, reflecting high costs of transportation and other logistics. Conversely, core inflation moderated to 15.86 percent in April 2026, from 16.21 percent in March. Similarly, the 12-month average inflation slowed to 19.16 percent in April 2026, from 20.05 percent in March, marking the sixth consecutive month of decline. Month-on-month, headline inflation also eased to 2.13 percent in April 2026, compared with 4.18 percent in March 2026, reflecting moderation in both food and core components. In light of these trends, the MPC called for a cautious and vigilant policy stance to anchor inflation expectations and safeguard macroeconomic stability.

The MPC noted with satisfaction the successful conclusion of the banking recapitalisation exercise, which culminated in the emergence of 33 banks with stronger financial soundness indicators, thereby enhancing their capacity to support the economy. The committee urged the central bank to remain proactive in addressing potential post-recapitalization risks to preserve financial system stability. Governor Cardoso also addressed the situation of banks still under regulatory forbearance due to legal and judicial issues, assuring that the CBN is fully engaged with their progress towards recapitalization.

On the foreign exchange market, gross external reserves remained robust at $49.49 billion as of May 15, 2026, compared to $48.35 billion at the end of March 2026, sufficient to cover 9.04 months of imports for goods and services. This strong buffer continues to reinforce investor confidence and support exchange rate stability. The CBN governor stated the current goal was to achieve $1 billion daily FX turnover, highlighting progress from approximately $1 million daily at the start of the administration to about $55 million currently, with occasional peaks of $1 billion.

The Centre for the Promotion of Private Enterprise (CPPE) hailed the CBN’s decision to retain monetary policy parameters. Dr. Muda Yusuf, CPPE Chief Executive, commented that the bank’s decision reflected a pragmatic, measured, and increasingly sophisticated understanding of Nigeria’s inflation dynamics. He emphasized that current inflationary pressures are substantially structural, externally induced, and driven more by supply-side disruptions than by excess domestic demand. Yusuf argued that monetary policy, while a powerful stabilization instrument, cannot solely resolve supply chain issues or structural bottlenecks, and excessive tightening could suffocate productivity and weaken industrial recovery. He commended the CBN for its disciplined management of the monetary policy architecture and the relative stability achieved in the foreign exchange market, viewing it as a transition from crisis management to confidence management crucial for macroeconomic credibility and investor trust.

Looking ahead, the CBN expects growth to remain resilient in 2026 despite emerging downside risks associated with the Middle East conflict. While projections indicate a moderate increase in inflation in the near term, the combined effects of previous policy tightening, exchange rate stability, and enhanced food supply are expected to support the return to disinflation. The committee reaffirmed its commitment to a forward-looking and evidence-based policy framework anchored on its primary mandate of achieving price stability while preserving the soundness and resilience of the financial system.