CIBN expects CBN to hold benchmark interest rate at 26.5% at MPC meeting

The Chartered Institute of Bankers of Nigeria has projected that the Central Bank of Nigeria will retain its benchmark interest rate at 26.5% when the Monetary Policy Committee concludes its 306th meeting. CIBN President and Chairman of Council, Dr Dele Alabi, made the projection in an interview with the News Agency of Nigeria on Saturday in Lagos.

Why the MPC is expected to hold

The projection comes as the MPC prepares to meet in Abuja on Monday to begin deliberations on the next policy direction. The CBN had held the MPR at 26.5% at its last meeting, as part of ongoing efforts to contain inflation and support macroeconomic stability.

Alabi said the CIBN's expectation of a hold is grounded in the CBN's inflation-targeting framework and recent economic data, neither of which provides a compelling case for a rate move in either direction at this point. "I expect the MPC to keep the interest rate constant and monitor developments over the next couple of months before considering any adjustment," he said.

He added that retaining the current policy stance would allow the apex bank to assess evolving inflationary pressures and broader economic conditions before making further adjustments. He said the approach would enable the CBN to make more informed decisions by allowing more time to observe how current macroeconomic trends develop before introducing any changes to its monetary policy stance.

Economists back the hold position

In a separate interview, Professor Akpan Ekpo, an economist and former MPC member, also advised the committee to hold the policy rate, pointing to global uncertainties as a reason for caution. He said tensions involving the United States and Iran could push up crude oil prices and intensify inflationary pressures in Nigeria, but argued such developments were likely to be temporary and should not warrant an increase in interest rates.

Ekpo urged the MPC to maintain the current policy rate while closely monitoring both domestic and global economic developments before making any further moves. Beyond monetary policy, Ekpo advised the Federal Government to increase investment in productive sectors to strengthen economic growth and improve overall stability, and urged policymakers to consider recommendations from the Manufacturers Association of Nigeria to support production and sustain economic expansion.

Background on the CBN's recent stance

The Central Bank of Nigeria has maintained a cautious monetary policy stance in recent months, opting to keep interest rates steady as it balances the need to curb inflation with supporting economic growth. At the end of its 305th MPC meeting on May 20, the apex bank retained the MPR at 26.5%, extending its pause after implementing a 50-basis-point rate cut in February.

The committee also left the Cash Reserve Ratio unchanged at 45% for commercial banks and 16% for merchant banks. In addition, it retained the Standing Facilities Corridor at +50/-450 basis points around the MPR and kept the CRR on non-TSA public sector deposits at 75%. According to the MPC, the decision was aimed at preserving tight monetary conditions amid renewed inflationary pressures, following consecutive increases in headline inflation in March and April, while providing more time to evaluate the impact of earlier policy measures on price stability.

Divergent views from analysts

The projection by the CIBN comes days after Standard Chartered Plc said it expects that the CBN will reduce interest rates. Standard Chartered Plc projected that the CBN will cut interest rates by only 150 basis points in 2026, as persistent inflationary pressures are expected to limit the pace of monetary easing. The revised forecast was contained in an investment note by Razia Khan, Chief Economist for Africa and the Middle East at Standard Chartered, where the bank adjusted its outlook for Nigeria's monetary policy direction. The bank now expects the MPR to close 2026 at 25%, while raising its average inflation forecast for the year to 15.5% from its previous estimate of 12%.

For Nigerian businesses and consumers, a hold on the MPR means borrowing costs will remain elevated in the near term, keeping pressure on loan repayments and business expansion plans. However, it also signals the CBN's commitment to fighting inflation, which could help stabilise the naira and consumer prices over the medium term.