Central Bank of Nigeria holds monetary policy rate unchanged at 306th MPC meeting in July

The Central Bank of Nigeria's Monetary Policy Committee voted on Tuesday to hold the Monetary Policy Rate unchanged and to leave all other key policy parameters at their existing levels, following the 306th meeting of the MPC held over 20 and 21 July in Abuja.

The committee, with 11 members in attendance, cited headline inflation of 15.91% for June 2026 and a flare-up in the Middle East conflict as central factors shaping its decision to maintain the current policy stance, according to the communiqué issued after the two-day meeting and published on the central bank's website.

INFLATION FRAMES DECISION

Headline inflation eased to 15.91% in June from 15.93% in May, while food inflation rose to 17.52% and core inflation moderated to 15.92%. Governor Olayemi Cardoso said that, in view of evolving developments, maintaining a cautious monetary policy stance remained appropriate.

By holding the Monetary Policy Rate and all other key parameters unchanged, the committee has signalled that it judges the existing policy configuration to be appropriate for current conditions. That configuration includes the standing facilities corridor around the MPR and the Cash Reserve Ratio, kept at 45% for deposit money banks, 16% for merchant banks and 75% for non-TSA public sector deposits.

The decision leaves the Monetary Policy Rate at 26.5%, the level set in February 2026, when the committee cut it by 50 basis points from 27%. Cardoso said the CBN remained committed to returning inflation to single digits.

EXTERNAL RISKS WEIGH

The MPC also flagged the flare-up in the Middle East conflict as a key external risk shaping its assessment. Cardoso said the committee noted the resurgence of hostilities, with particular attention to its spillover effects on global energy prices and the potential pass-through to domestic inflation.

The 11 members present at the meeting weighed those external risks alongside domestic considerations including food prices, exchange rate dynamics and credit conditions. Cardoso said holding the stance would allow the committee to monitor incoming data and assess the direction of inflation before taking further action.

The committee's next meeting is scheduled for 21 and 22 September 2026.

Most analysts had expected the committee to hold the rate.

The committee welcomed the outcome of the banking sector recapitalisation exercise, and Cardoso said 33 of Nigeria's 37 banks had met the new capital requirements.