The decision of the Central Bank of Nigeria (CBN) to retain the monetary policy rate (MPR) at 26.5 per cent reflects a careful “wait and watch” approach aimed at preserving macroeconomic stability amid renewed inflationary and external pressures, according to Deputy Head of Research at PAC Research, Afamuefuna Chukwurah.
This comes as the Centre for the Promotion of Private Enterprise (CPPE) commended the decision of the CBN for maintaining all key monetary policy parameters at the 305th meeting of the Monetary Policy Committee (MPC). CPPE said the decision reflected a pragmatic, measured and increasingly sophisticated understanding of the inflation dynamics currently confronting the Nigerian economy.
The MPC, on Wednesday, retained the MPR at 26.5 per cent, maintained the asymmetric corridor around the MPR, and retained the cash reserve ratio (CRR) at 15 per cent for merchant banks, 45 per cent for deposit money banks and 75 per cent for non-TSA deposits.
CPPE Hails MPC Decision
CPPE, in a statement signed by its Chief Executive Officer, Dr Muda Yusuf, said at a time of heightened global uncertainty and mounting geopolitical tensions, the decision of the MPC sends a powerful signal of policy maturity, strategic restraint and confidence in the direction of macroeconomic management.
“The current inflationary pressures are substantially structural and externally induced”, CPPE observed, adding that the intensifying geopolitical tensions involving Iran, Israel and the United States have triggered fresh volatility in the global energy market, pushing up crude oil prices and transmitting severe cost pressures into domestic energy prices, transportation, logistics and manufacturing operations.
Analyst Insights
Speaking on Channels television yesterday, following the conclusion of the MPC meeting, Chukwurah said the committee’s decision did not come as a surprise to market analysts who had been tracking developments in inflation, exchange rate stability and external market volatility.
“The CBN was not going to hastily continue the easing session because it wants to adopt a wait-and-watch approach to see how long this volatility is going to stretch,” he said. According to him, the apex bank also avoided further tightening in order not to undermine the gradual economic gains recorded in recent quarters.
“It was not also going to hastily hike this rate so that it does not stifle the gains we’ve been seeing in growth in the domestic economy so far,” he added.
The MPC had on Wednesday voted unanimously to retain the benchmark interest rate at 26.5 per cent, alongside all other monetary parameters, citing inflation concerns and global uncertainties linked to geopolitical tensions, particularly the Middle East crisis.
Market Reactions
Chukwurah noted that although inflationary pressures had moderated from the fourth quarter of 2025 into the first quarter of 2026, recent external shocks, especially the U.S.-Iran conflict, triggered fresh volatility that warranted policy caution. He dismissed suggestions that the Nigerian Exchange Limited (NGX) reacted negatively to the MPC decision after the equities market closed lower by over one per cent on Wednesday.
According to him, the market correction was more reflective of speculative trading activities and overstretched valuations than direct investor disappointment over the policy stance. “What we saw in the market yesterday was just an outcome from price speculation or price action, not necessarily a reaction to the MPC decision,” he said, explaining that the MPC’s decision had instead provided clarity to investors that the CBN remains focused on economic stability rather than rushing into monetary easing.
On the fixed income market, Chukwurah said yields would likely remain elevated in the near term because interest rates are still high, making fixed income securities attractive to risk-averse investors. “Interest rates are still quite elevated, so we expect that yields will remain high. It’s still a viable option for investors that prefer a relatively riskless investment opportunity,” he stated.
However, he projected stronger investor appetite for equities over time as markets increasingly price in the possibility of future monetary easing if inflation conditions improve. “We expect that there will be more interest in the equity market because the CBN has signalled an ease or a hold in this rate,” he said.
External Reserves and Fiscal Support
Addressing concerns over Nigeria’s external reserves and the role of foreign portfolio inflows in supporting market stability, Chukwurah maintained that the country’s reserve position remains relatively strong despite recent declines. “We maxed at $50 billion and currently it’s about $45 billion. But it’s not to the point that it’s worrisome. It still serves as a strong buffer,” he said.
He added that improved exchange rate management and stronger investor confidence had continued to support foreign portfolio participation in the domestic market.
Chukwurah stressed that monetary policy alone would not be sufficient to contain food inflation, particularly as Nigeria enters the planting season, warning that fiscal authorities must intensify support for agriculture and food supply chains. He called for targeted incentives to farmers and agricultural producers while cautioning against leakages and poor implementation that have historically weakened intervention programmes.
He also expressed concern over the growing political distractions ahead of the 2027 election cycle, warning that excessive focus on political calculations could weaken economic management efforts, arguing that politicians would still be under pressure to deliver measurable economic improvements as part of their campaign narratives.
