CBN Holds Benchmark Interest Rate at 26.5% Amid Middle East Tensions and Inflation Risks

The Monetary Policy Committee of the Central Bank of Nigeria has resolved to retain the benchmark Monetary Policy Rate at 26.5 per cent for the second consecutive meeting, pointing to heightened geopolitical conflict in the Middle East and ongoing domestic inflation risks. Announcing the decisions following the committee’s 306th meeting in Abuja, CBN Governor Olayemi Cardoso stated that all 11 members voted to hold the MPR steady, while also maintaining the Cash Reserve Ratio at 45 per cent for Deposit Money Banks, 16 per cent for Merchant Banks, and 75 per cent for non-Treasury Single Account public sector deposits.

The decision comes despite a slight easing in domestic headline inflation, which edged down to 15.91 per cent in June 2026 from 15.93 per cent in May the first drop after three consecutive monthly increases. However, the committee noted that rising food inflation, which climbed to 17.52 per cent in June, and the threat of escalating Middle East hostilities on global energy prices necessitated a cautious policy stance.

Economic experts and organized private sector groups have largely backed the MPC’s decision to hold rates, describing it as a necessary measure to guard macroeconomic stability. While acknowledging that elevated interest rates continue to strain borrowing costs for manufacturers and small enterprises, industry leaders noted that an immediate rate cut under current global conditions could exacerbate inflationary pressures.

In additional economic indicators, the apex bank reported that gross external reserves grew to $52.52 billion as of mid-July, providing roughly 11 months of import cover. Cardoso also revealed that 33 out of Nigeria’s 37 commercial banks have successfully met the new recapitalisation standards ahead of the deadline, with the remaining institutions undergoing guided regulatory compliance, while real Gross Domestic Product expanded by 3.89 per cent in the first quarter of 2026.