Nigeria Economic Update, Issue 20

The Central Bank of Nigeria’s (CBN) Monetary Policy Committee (MPC), at its 305th meeting held on 19–20 May 2026, retained the Monetary Policy Rate (MPR) at 26.5 percent. The Committee also maintained the asymmetric corridor around the MPR at +50/-450 basis points, while retaining the Cash Reserve Ratio (CRR) at 45.0 percent for Deposit Money Banks, 16.0 percent for Merchant Banks, and 75.0 percent for non-Treasury Single Account (non-TSA) public sector deposits.  The decision to maintain policy rates reflects the CBN’s cautious approach to balancing inflation control with broader macroeconomic stability objectives. By sustaining a tight monetary policy stance, the MPC aims to reinforce ongoing efforts to moderate inflationary pressures, stabilise the exchange rate, and manage liquidity conditions within the financial system. The decision also underscores persistent concerns regarding elevated inflation, despite the recent moderation in month-on-month price increases. However, high borrowing costs may continue to constrain private sector credit growth, investment, and business expansion, particularly among small and medium-sized enterprises.  To achieve more sustainable inflation control, monetary tightening should be complemented by fiscal and structural measures to address supply-side drivers of inflation, particularly food insecurity, logistics bottlenecks, and rising energy costs. The government should also prioritise policies that enhance productivity and support domestic production to sustainably ease inflationary pressures while minimising the adverse effects of high interest rates on economic growth, employment, and private-sector development.