CBN retains rate at 26.5%, cites Middle East tensions

•Says banks no longer need forbearance

•External reserves sustains upward trend, hit $52.5bn

By Emma Ujah, Abuja Bureau Chief

The Central Bank of Nigeria (CBN) has retained the Monetary Policy Rate (MPR) at 26.5 per cent.

CBN Governor, Mr. Olayemi Cardoso, announced the decision yesterday after the 306th Monetary Policy Committee (MPC) meeting in Abuja.

He said the committee also retained the standing facilities corridor around the MPR at +50/-450 basis points, the Cash Reserve Ratio (CRR) for Deposit Money Banks at 45 per cent, Merchant Banks at 16 per cent, and non-TSA public sector deposits at 75 per cent.

Explaining the decision, Cardoso said: “The committee’s decision to maintain the current policy stance followed a thorough assessment of the balance of risks.

Although headline inflation moderated marginally in June 2026, global uncertainties have heightened, mainly due to the renewed hostilities in the Middle East.”

He added: “In view of these developments, maintaining a cautious monetary policy stance remains appropriate. The committee noted the resurgence of hostilities in the Middle East, particularly their likely impact on global energy prices and the potential pass-through to domestic inflation.”

According to him, “Available evidence suggests that the Nigerian economy has remained largely resilient to external shocks, reflecting the gains from prior fiscal and monetary reforms. Maintaining the current policy stance will provide an opportunity to monitor incoming data and assess the trajectory of inflation before taking further decisions.”

Cardoso said the MPC acknowledged the Federal Government’s renewed commitment to policy coordination.

“Members noted that greater alignment between fiscal and monetary policies would enhance policy effectiveness and strengthen macroeconomic fundamentals. The committee also underscored the potential benefits of Executive Order 09 and commended government’s efforts to improve crude oil production while encouraging reforms in the solid minerals sector,” he said.

On the banking sector, Cardoso said: “The committee recognised the positive outcome of the recapitalisation exercise and the improvement in the resilience of the banking system. However, it urged the CBN to sustain effective surveillance to preserve financial sector soundness and mitigate potential risks.”

Responding to questions on regulatory forbearance, Cardoso said: “Forbearance had outlived its time. It was introduced because of COVID-19, but we are now in 2026 and no longer see any reason for it to remain part of the banking system. It was time to repay.”

He added: “Banks recalibrated their portfolios, leading to a temporary decline in outstanding risk assets. As they raise more capital, build buffers and strengthen capacity, lending will return to levels commensurate with their size and capabilities.”

According to him, “This reflects a transition to a more sustainable and better-quality credit environment. We want to avoid unanticipated shocks and the boom-and-bust cycle.”

Cardoso also disclosed that Nigeria’s external reserves had risen to $52.5 billion, enough to finance nine months of imports, well above the international benchmark of three months.

On the naira, he said: “Our focus is to sustain a transparent, liquid foreign exchange market driven by willing buyers and willing sellers. Where the exchange rate settles depends on fundamentals, including oil and gas exports, foreign direct investment and domestic productivity. We are comfortable that Nigeria now has a fully functional, transparent market, with daily turnover sometimes exceeding $1 billion.”

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