Nigeria Holds Interest Rate At 26.50 Percent As CBN Warns On Inflation Risks

The Central Bank of Nigeria has kept its benchmark interest rate unchanged at 26.50 percent as policymakers adopted a cautious stance amid renewed inflationary pressure and global economic uncertainty.

The decision was announced after the Monetary Policy Committee meeting in Abuja, earlier today, where officials voted to maintain the current rate following a 50 basis point cut earlier this year. Central Bank Governor Olayemi Cardoso said policymakers remained focused on anchoring inflation expectations and preserving macroeconomic stability.

Most economists had expected the central bank to leave rates unchanged as inflation pressures began rising again after months of gradual decline. Nigeria’s headline inflation rate increased for the second consecutive month in April, reversing part of the earlier disinflation trend that had supported expectations for further easing.

Analysts say the renewed inflationary pressure has been driven partly by rising domestic fuel costs linked to the ongoing Center East conflict involving Iran, which has increased global oil market volatility and affected transportation and food prices across Nigeria.

The decision means Nigeria continues to maintain one of the highest benchmark interest rates globally as authorities attempt to stabilise prices and support the naira following years of severe inflation and currency instability.

The central bank had previously kept rates elevated through most of 2025 before beginning a cautious easing cycle earlier this year with a modest 50 basis point reduction from 27 percent to 26.50 percent. At the time, officials cited improving inflation trends, exchange rate stability and stronger food supply conditions.

Despite recent improvements, inflation remains a major challenge for households and businesses. High borrowing costs have also continued to pressure private sector investment and consumer spending, even as authorities argue tight monetary policy remains necessary to prevent a return to runaway inflation.

Since taking office in 2023, President Bola Tinubu has introduced major economic reforms including fuel subsidy removal and exchange rate liberalisation. While international financial institutions have praised the reforms, the policies have also contributed to sharp increases in living costs and inflationary pressure.

Financial analysts say the latest decision signals that the central bank is prioritising inflation control and currency stability over aggressive rate cuts despite growing pressure to support economic growth.

Markets will now closely watch future inflation data, exchange rate performance and global oil prices for signals on whether the central bank may resume rate cuts later in the year.