CBN Keeps 26.5% Rate, Declares No FX Market Intervention

…as Reserves hit $50b

By Emma Ujah, Abuja Bureau Chief

The Central Bank of Nigeria (CBN) has kept the Monetary Policy Rate (MPR) unchanged at 26.5 percent, maintaining other key monetary parameters at their current levels.

During a briefing in Abuja following the 305th meeting of the Monetary Policy Committee (MPC), Governor Olayemi Cardoso announced that the Standing Facility Corridor around the MPR would remain at +50/-450 basis points.

The Cash Reserve Requirements (CRR) were also held steady: 45% for deposit money banks, 16% for merchant banks, and 75% for non‑TSA public sector deposits.

Cardoso explained that the MPC’s decision was based on a thorough assessment of risks to the economic outlook. He noted that, although inflation had risen slightly for two consecutive months—primarily due to external shocks—the MPC viewed the increase as transitory and expressed confidence that the current macro‑economic environment could support a return to disinflation.

He highlighted the spill‑over effects of the Middle East crises, which have pushed up energy prices, transportation costs, and other logistics expenses. However, he added that the impact on the Nigerian economy has been largely muted thanks to prior policy reforms, including exchange‑rate stability, stronger external reserve buffers, improved monetary policy transmission, a well‑capitalised banking system, and ongoing fiscal consolidation.

“These measures have significantly enhanced the economy’s ability to absorb external shocks, reducing the pass‑through of global commodity and energy price increases to domestic inflation,” Cardoso said. “Consequently, the essential conditions for price stability remain firmly in place.”

He further stated that a cautious and vigilant policy stance is necessary to anchor inflation expectations and safeguard macro‑economic stability.

Reserves hit $50b

Cardoso revealed that the nation’s foreign reserves stood at $49.49 billion, close to pre‑Middle East crisis levels. He expressed optimism that reserves sufficient to cover nine months of imports would strengthen investor confidence in an economy he described as having a positive and resilient outlook.

He acknowledged a moderate near‑term rise in inflation due to external shocks but emphasized that it would be temporary. He added that improvements in food supply, a stable exchange rate, and ongoing monetary and fiscal reforms would ultimately drive the much‑anticipated economic growth.

No FX market intervention

Cardoso also clarified that the CBN has not intervened in the foreign‑exchange market, arguing that the market is already deep enough to operate independently. He explained, “What we have done is meet the needs of loan repayment or the needs of various government agencies. As we do this, funds also flow in.”

Regarding the recent banking recapitalisation, the Governor said the CBN will remain proactive and adopt necessary measures to address potential post‑recapitalisation risks, ensuring financial system stability. He noted that banks that have not met recapitalisation requirements due to regulatory or legal issues will be given an allowance to comply while maintaining system stability.

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