The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) has retained the Monetary Policy Rate (MPR) at 26.5 per cent, opting for a cautious approach to inflation management amid renewed global uncertainties and persistent domestic price pressures.
Announcing the decision after the committee’s meeting, the Governor of the CBN and Chairman of the MPC, Yemi Cardoso, said the move was influenced by renewed geopolitical tensions in the Middle East, rising food inflation, and the need to sustain recent gains in price stability.
The MPC also retained the asymmetric corridor around the MPR at +500/-100 basis points, the Cash Reserve Ratio (CRR) at 45 per cent for Deposit Money Banks (DMBs), 16 per cent for merchant banks, and 75 per cent for non-TSA public sector deposits.
Cardoso explained that the committee’s decision followed a careful assessment of both domestic and global economic conditions. Although headline inflation eased marginally to 15.91 per cent in June 2026 from 15.93 per cent in May, renewed uncertainty stemming from the Middle East conflict warranted a cautious monetary policy stance.
While headline inflation showed slight moderation, food inflation rose to 17.52 per cent from 16.96 per cent, driven by supply disruptions in food-producing areas and increasing transportation costs. However, core inflation slowed to 15.92 per cent from 16.82 per cent, supported by improved exchange rate stability.
The committee noted that maintaining the current policy stance would allow it to monitor emerging economic data and assess the inflation outlook before making further adjustments.
The MPC also acknowledged improved coordination between fiscal and monetary authorities, stating that stronger policy alignment had helped cushion the Nigerian economy against external shocks, including rising global oil prices linked to the Middle East crisis.
It commended the Federal Government’s efforts to boost crude oil production and encouraged deeper reforms in the solid minerals sector to diversify revenue sources.
On the banking sector, the committee welcomed the successful bank recapitalisation exercise, describing it as a significant step toward strengthening the resilience of Nigerian financial institutions. It, however, urged the CBN to sustain close regulatory supervision to preserve financial system stability.
The committee observed that Nigeria’s economy remained resilient despite external challenges. Real Gross Domestic Product (GDP) grew by 3.89 per cent in the first quarter of 2026, driven largely by the non-oil sector, while the Composite Purchasing Managers’ Index (PMI) returned to expansion, rising to 50.1 points in June from 49.6 points in May.
Nigeria’s external reserves also improved to $52.52 billion as of July 17, 2026, enough to cover approximately 11 months of imports, compared to $50.47 billion at the end of May. The reserves have increased by more than $26 billion since their 2016 low, reaching their highest level in about 17 years.
Addressing concerns over claims that the naira is undervalued at about ₦1,385 to the dollar, Cardoso dismissed the assertion, reiterating that the CBN remains committed to maintaining a transparent, liquid and market-driven foreign exchange market.
According to him, the apex bank is not focused on defending any specific exchange rate but on ensuring an efficient willing-buyer, willing-seller market. He added that the long-term stability of the naira would depend on stronger crude oil earnings, increased foreign direct investment, higher domestic productivity and reduced import dependence.
Cardoso also announced that the newly introduced Nigeria Official Overnight Rate (NOFA) would replace judgment-based benchmarks with transaction-based pricing in the interbank market. He said the benchmark aligns Nigeria with international best practices and would support the CBN’s gradual transition to an inflation-targeting monetary framework.
Responding to concerns over declining bank credit following the withdrawal of COVID-19 regulatory forbearance, Cardoso said the policy had fulfilled its purpose. He explained that banks were simply recalibrating their balance sheets and strengthening capital buffers, describing the adjustment as a sign of a healthier banking environment rather than deterioration.
On recent licence revocations, the CBN governor said the affected institutions were sanctioned for prolonged supervisory and compliance failures, stressing that safeguarding depositors’ funds remains the apex bank’s primary responsibility. He assured Nigerians that the country’s banking system remains safe and stable.
He added that banks yet to meet the new capital requirements remain under close regulatory oversight while the CBN works with them on appropriate resolution measures.
Cardoso further clarified that lower denomination coins remain legal tender, although their usage has declined as more Nigerians embrace digital payment channels. He noted that the country’s financial inclusion strategy and increasing adoption of electronic payments would naturally reduce dependence on physical cash over time.
