CBN Retains Benchmark Lending Rate At 26.5% Amid Inflation Concerns

Governor of the Central Bank of Nigeria, Olayemi Cardoso, on Wednesday announced that the Monetary Policy Committee (MPC) has retained the Monetary Policy Rate (MPR) at 26.5 per cent, citing persistent inflationary pressures and uncertainties in the global economic environment.

Cardoso disclosed the decision at the end of the MPC meeting attended by all 11 members of the committee, who reviewed recent developments in both the domestic and global economies as well as the near- to medium-term outlook.

Besides retaining the benchmark interest rate at 26.5 per cent, the committee also maintained the asymmetric corridor around the MPR at +500 and -100 basis points.

The MPC further retained the Cash Reserve Ratio (CRR) for Deposit Money Banks at 45 per cent, Merchant Banks at 16 per cent, and non-Treasury Single Account public sector deposits at 75 per cent.

According to Cardoso, the committee’s decisions were anchored on a comprehensive assessment of risks to the economic outlook, particularly rising inflationary pressures driven largely by external shocks.

Although inflation has risen marginally for two consecutive months, the committee expressed confidence that the trend would ease over time, describing the current inflationary pressures as largely temporary.

“The MPC recognises its transitory nature and remains confident that the current macroeconomic environment is sufficiently robust to support a return to disinflation,” Cardoso said.

The CBN governor noted that the committee paid close attention to the spillover effects of the Middle East crisis, which he said had exerted upward pressure on energy prices, transportation costs and logistics globally.

He, however, stated that the impact on the Nigerian economy had remained relatively muted due to earlier policy measures and reforms implemented to strengthen macroeconomic stability.

The MPC stressed the need to sustain existing monetary tightening measures to consolidate gains recorded in stabilising the foreign exchange market, moderating inflation expectations and restoring investor confidence.

The decision to hold rates steady comes amid continued concerns over inflationary pressures, exchange rate volatility and global economic uncertainties affecting emerging markets.

The committee reaffirmed its commitment to closely monitor both domestic and international economic developments and take appropriate measures aimed at ensuring price stability and sustainable economic growth.