CBN Retains Interest Rate At 26.5%

The Central Bank of Nigeria (CBN) has kept the country’s benchmark interest rate unchanged at 26.5 per cent following the latest meeting of its Monetary Policy Committee.

CBN Governor Olayemi Cardoso announced the decision on Wednesday after the conclusion of the MPC’s 305th meeting held in Abuja between 19 and 20 May. The move follows the bank’s earlier decision in February to reduce the Monetary Policy Rate (MPR) by 50 basis points from 27 per cent.

Speaking after the meeting, Cardoso explained that the committee based its decision on rising inflation and the impact of global economic pressures. According to him, inflation has increased slightly for two straight months, mainly due to external shocks affecting the wider economy.

“The decisions of the MPC were anchored on a comprehensive assessment of risk to the outlook,” Cardoso said. He added that the committee believes the current economic environment remains strong enough to support lower inflation over time.

Alongside the decision to retain the interest rate in Nigeria, the MPC adjusted the asymmetric corridor around the MPR to +50/-450 basis points. The adjustment aims to discourage banks from leaving excess funds with the CBN and encourage more lending within the economy.

The committee also maintained the Cash Reserve Ratio for commercial banks at 45 per cent, while merchant banks remain at 16 per cent. In addition, the reserve requirement on non-TSA public sector deposits stayed at 75 per cent.

Nigeria’s headline inflation rose to 15.69 per cent in April, according to the National Bureau of Statistics (NBS). Rising fuel prices and international tensions involving the United States, Israel and Iran have contributed to increasing costs of goods and services.

The disruption of oil shipments through the Strait of Hormuz has also added pressure to global energy markets and Nigeria’s economy.

Do you think keeping the interest rate unchanged will help stabilise Nigeria’s economy?