CBN MPC Set to Hold Rates Steady Amid Inflation, Global Oil Shock

Financial analysts at Meristem Securities Limited have said the Central Bank of Nigeria’s Monetary Policy Committee will likely keep its policy rates unchanged at the upcoming meeting. The committee faces a delicate balance between rising domestic inflation and a global energy crisis driven by Middle East tensions.

“We expect the committee to lean towards a wait-and-see approach and keep its policy decisions at the current level,” Meristem said in a macroeconomic insights report released ahead of the meeting on Monday. “Given the mixed economic indicators, with emerging inflationary pressure calling for a hawkish decision and slowing economic activity demanding a dovish stance, a hold is the most pragmatic path forward.”

The MPC is scheduled to hold its two-day deliberations on 19 and 20 May. Domestic pressures have intensified since the MPC’s last gathering in February. Nigeria’s headline inflation climbed for the second consecutive month, reaching 15.69 per cent year-on-year in April, driven by soaring food prices.

At the same time, the private sector is showing signs of strain. The CBN Composite Purchasing Managers’ Index dropped below the 50-point contraction threshold to 49.40 points in April, down from 53.20 points in March. This signals a retreat in industry and service sectors due to rising energy, transport, and production costs.

Analysts at Futureview Research, in its Inflation Report for April 2026 released on Monday, noted that while price levels remain high, there are signs of stabilising momentum. “Inflationary pressures are expected to remain relatively moderate in the near term as the slower pace of increase in both food and core inflation suggests some easing in price momentum,” the firm stated.

Futureview warned that structural vulnerabilities could still threaten price stability. “Inflation risks remain elevated due to persistent transportation costs, foreign exchange pressures, insecurity affecting food-producing regions, and rising energy-related expenses.” The firm added that seasonal demand pressures and supply constraints may continue to push consumer prices upward in the coming months.

This domestic friction coincides with massive volatility in international markets. Direct military conflict between the United States and Iran, alongside a three-month blockade of the Strait of Hormuz, has choked global crude flows. Brent crude surged to a multi-year high, averaging roughly $119 per barrel in April and occasionally spiking to $126 per barrel.

“The global oil market remains heavily influenced by supply-side factors, including conflicts, shipping delays, and instability in the Gulf region. The recent surge in global oil prices raises inflation risks globally through higher fuel and transport costs. As a result, the MPC is more likely to hold rates to anchor inflation expectations,” the Meristem report noted.

Global central banks have also halted their previous monetary easing cycles. The US Federal Reserve recently held interest rates steady at 3.50 per cent–3.75 per cent against resilient US growth and 3.80 per cent inflation. The Bank of England maintained its rate at 3.75 per cent, while the European Central Bank paused its rate cuts as Eurozone inflation ticked up to 3.00 per cent on expensive energy imports.

Despite a minor 7.59 per cent month-on-month recovery in Nigeria’s oil production to 1.66 million barrels per day in April, structural issues like pipeline vandalism and maintenance delays continue to limit fiscal cushions. With external and domestic pressures limiting the scope for aggressive policy manoeuvring, consensus estimates suggest the MPC will hold all major parameters tight.

“We expect the Committee to retain the Monetary Policy Rate at 26.50 per cent. Furthermore, the Committee is anticipated to retain the Asymmetric Corridor at +50/-450 basis points around the MPR, keep the Liquidity Ratio at 30.00 per cent, and maintain the Cash Reserve Ratio at 45.00 per cent for Deposit Money Banks,” Meristem added.