Nigeria Holds Key Policy Rate at 26.5%

The Central Bank of Nigeria left its benchmark interest rate unchanged at 26.50% at its July 21, 2026 meeting, citing persistent inflationary risks amid heightened uncertainty stemming from renewed hostilities in the Middle East. Governor Cardoso stated that the domestic economy had proved resilient to external shocks, as the Africa's largest oil producer is partialy shielded by domestic refining capacity, and keeping policy unchanged would allow the committee to assess incoming economic data before making further decisions. Headline inflation held steady at 15.9% in June, unchanged from the previous month and defying expectations. Looking ahead, policymakers expect inflation to ease gradually over the medium term, supported by the stability of the naira and the lagged effects of previous monetary tightening. However, the committee reiterated its readiness to act if escalating geopolitical tensions threaten price or financial stability.

Nigeria's central bank left its key interest rate steady at 26.50% on May 20, 2026, following a 50 bps rate hike in February. The meeting marked policymakers’ first gathering since the Iran conflict erupted. Governor Olayemi Cardoso said a cautious and vigilant stance was needed to anchor inflation expectations and safeguard macroeconomic stability. Nigeria’s headline inflation climbed for a second month to 15.7% in April, the highest since November, reversing the disinflationary trend observed for 11 consecutive months. The central bank also retained other key monetary parameters. The asymmetric corridor was kept at +50/-450 basis points around the policy rate, while the Cash Reserve Ratio remained at 45% for commercial banks and 16% for Merchant Banks. The liquidity ratio was unchanged at 30%.

Nigeria's central bank trimmed its key interest rate by 50 bps to 26.50% during its February 2026 meeting, after keeping it unchanged at 27% in November last year. The move pushed down borrowing costs to the lowest since mid-2024, aiming to support growth amid moderating inflation. Governor Olayemi Cardoso said that recent data suggested the ongoing disinflation trajectory would continue. He added that the lagged transmission of previous monetary tightening, sustained exchange rate stability and enhanced food supply were helping bring down inflation. Nigeria’s headline inflation rate eased slightly to 15.10% in January 2026 from 15.15% in December, marking the tenth consecutive monthly decline. Meanwhile, policymakers retained key monetary parameters. The asymmetric corridor was kept at +50/-450 basis points around the policy rate, while the Cash Reserve Ratio remained at 45% for Deposit Money Banks and 16% for Merchant Banks. The liquidity ratio was unchanged at 30%.