By Anthony Otaru, Abuja
The Central Bank of Nigeria (CBN) on Tuesday retained the Monetary Policy Rate (MPR) at 26.5 per cent, opting to keep borrowing costs high despite signs of easing inflation, as escalating geopolitical tensions in the Middle East and growing global economic uncertainties continue to threaten Nigeria’s macroeconomic stability.
The decision was reached unanimously at the end of the 306th meeting of the Monetary Policy Committee (MPC), which concluded in Abuja after a two-day deliberation on domestic and global economic developments.
Besides retaining the benchmark interest rate at 26.5 per cent, the committee also left all other key monetary policy parameters unchanged, signalling its determination to sustain the tight monetary stance adopted to tame inflation, stabilise the naira and safeguard the economy against external shocks.
Announcing the outcome of the meeting, CBN Governor and Chairman of the MPC, Olayemi Cardoso, said the committee concluded that although inflationary pressures were gradually easing, prevailing global uncertainties demanded caution.
“The committee’s decision to maintain the current policy stance followed a thorough assessment of the balance of risks. Although headline inflation moderated marginally in June 2026, global uncertainties have heightened mainly due to renewed hostilities in the Middle East.
“In view of the evolving developments, maintaining a cautious monetary policy stance remains appropriate,” Cardoso said.
The MPC retained the Standing Facilities Corridor around the MPR, maintained the Cash Reserve Ratio (CRR) at 45 per cent for Deposit Money Banks and 16 per cent for merchant banks, while leaving the CRR for non-Treasury Single Account (non-TSA) public sector deposits at 75 per cent.
The latest decision comes barely days after the National Bureau of Statistics (NBS) announced that Nigeria’s headline inflation eased marginally to 15.91 per cent in June from 15.93 per cent recorded in May, marking the first decline in three months.
However, despite the moderation in inflation, the apex bank declined to loosen monetary policy, arguing that external risks—particularly the renewed conflict in the Middle East—could reverse recent gains by triggering higher global energy prices and fresh inflationary pressures.
Cardoso said available economic indicators showed that Nigeria had remained resilient in the face of global headwinds, attributing the performance to reforms introduced by both the fiscal and monetary authorities.
“Available evidence suggests that the Nigerian economy has remained largely resilient to the external shocks, reflecting the gains from prior reforms implemented by the fiscal and monetary authorities,” he said.
He stressed that closer coordination between the Federal Government and the Central Bank had become increasingly important in sustaining macroeconomic stability and supporting long-term economic growth.
“Members of the committee agreed that greater alignment between fiscal and monetary policies would improve policy effectiveness and support broader economic objectives,” Cardoso added.
Analysts say the MPC’s latest decision reflects the Central Bank’s preference for policy stability over premature easing, despite persistent business concerns about the high cost of borrowing and its impact on investment and economic expansion.
Beyond monetary policy, Cardoso addressed concerns over the apparent scarcity of lower naira denominations, insisting that smaller notes and coins remain legal tender despite their reduced circulation.
“They are still legal tender. To the extent that the Central Bank has not said otherwise, please assume they are legal tender,” he said.
He explained that the declining use of lower denominations reflected changing consumer behaviour and the rapid growth of electronic payments rather than any deliberate withdrawal by the apex bank.
According to him, the CBN’s Payments System Vision (PSV) 2028 is driving greater financial inclusion and accelerating Nigeria’s transition towards a digital payment ecosystem.
“The ecosystem is moving, as indeed we want it to move, to one of financial inclusion where digitisation is becoming increasingly important. If there is no need for coins or for lesser denominations, then there is no need to have them,” Cardoso said.
He noted that increasing numbers of Nigerians now rely on electronic payment channels for transactions both locally and internationally, reducing demand for lower-value currency notes.
The MPC’s decision marks the second consecutive meeting this year at which the benchmark interest rate has been retained, underscoring the Central Bank’s resolve to prioritise price stability and exchange rate management while monitoring the impact of global geopolitical developments on the domestic economy.
