CBN Keeps Interest Rate At 26.5 Percent

By Babatunji Wusu

The CBN interest rate has remained unchanged at 26.5 per cent after the Monetary Policy Committee of the Central Bank of Nigeria concluded its 305th meeting in Abuja on Wednesday.

Olayemi Cardoso announced the decision after the two-day meeting held between 19 and 20 May. The move follows an earlier reduction in February when the Central Bank lowered the Monetary Policy Rate from 27 per cent to 26.5 per cent.

According to Cardoso, the committee based its latest decision on rising inflation and increasing external economic pressures affecting Nigeria’s economy. He explained that inflation had increased slightly for two consecutive months due mainly to global shocks.

“The decisions of the MPC were anchored on a comprehensive assessment of risk to the outlook, although inflation has risen marginally for two consecutive months, largely induced by external shocks,” he said.

The CBN interest rate decision also included changes to the asymmetric corridor around the Monetary Policy Rate, which now stands at +50/-450 basis points. The adjustment aims to discourage commercial banks from leaving unused funds with the apex bank while encouraging more lending within the economy.

The committee retained the Cash Reserve Ratio for commercial banks at 45 per cent and kept the rate for merchant banks unchanged at 16 per cent. It also maintained the reserve requirement on non-TSA public sector deposits at 75 per cent.

Nigeria’s inflation rate recently climbed to 15.69 per cent in April, according to the National Bureau of Statistics. Rising fuel prices and global tensions involving the United States, Israel and Iran have contributed to higher costs across the country.

The CBN interest rate stance reflects efforts by policymakers to manage inflation while supporting economic stability during ongoing global uncertainty.

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