By Dayo Omoogun
The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) has become an integral part of Nigeria’s macroeconomic strategy and national development planning so much so that Nigerians wait with bated breath for its decision each time its meetings approach, similar to how a patient anticipates the pronouncement of a physician after a clinical review.
It is said that the mark of a good prophet is when his prophecies come to pass. Likewise the committee has earned the respect, trust and confidence of Nigerians, particularly under this dispensation, for churning out decisions that have turned the economy from a chaotic, malevolent contraption to a well oiled and well managed vehicle of steady transformation.
So when it held its 305th meeting on May 19 and 20, 2026, Nigerians- professionals, bankers, businessmen, economic analysts, traders, etc waited as usual for the ‘verdict’.
Having met and deliberated extensively, the Committee has announced its decision to retain the parameters as they were from its last meeting held in February. We note in passing another similarity between the two meetings which is that 11 members out of 12 attended the meeting.
Stating it explicitly therefore, the rates remain as follows: Monetary Policy Reserve (MPR) 26.5%; Cash Reserve Ratio (CRR) for Deposit Money Banks 45% while for Merchant Banks 16%; the Standing Facilities Corridor around the MPR at +50/-450 basis points and, non-TSA public sector deposits at 75%. This might not appeal to people who would have preferred economic expansion but the apex bank has, in its wisdom, through this Committee taken a stand – to tow the path of stability and caution.
The Committee believes that the slight increase in inflation statistics and one or two other minor negatives over the last two months is only a passing phase and is not substantial enough to trigger any fretting or fiddling. Many experts whose opinions were sampled, are in agreement with this position.
The recent Israeli- Iranian war which also attracted the US involvement exerted some pressure on oil prices which reverberated around the world but here at home the effect was less noticeable because of some buffers that are already in place such as the enhanced external reserves, the much more stabilised and transparent forex market and lately, the better capitalised banking sector, following the recent highly successful recapitalisation exercise. With these shock absorbers in place the Committee’s stand is quite understandable and commendable.
Some of the implications for various interests are as follows: Borrowers’ costs remain at their current levels as commercial banks are unlikely to significantly adjust their lending rates since the bench mark rates have not increased. For businesses and manufacturers, this means the cost of capital remains plateaued at its current level. Hopes of a reduction in borrowing costs prior to the meeting are for now dashed. Maybe we can find consolation in the saying that ” if you cannot alleviate my situation by all means do not compound it.”
Companies looking to fund new projects using debt will likely maintain a cautious approach. In the face of high costs complicated by energy and transport cost surges, businesses will most likely prioritise efficiency over aggressive capital expenditure.
Retention of rates engenders predictability and stability of yields on government securities such as Treasury Bills and bonds. Investors in long-term fixed income face fewer immediate valuation shocks and less worries.
From all indications the MPC’s existing strategy is effectively curbing excess money supply and generally guiding inflation downward, recent negligible reversals notwithstanding. By keeping conditions tight, the central bank aims to ensure that recent drops in inflation solidify rather than rebound.
This current state of affairs is a good one for portfolio investors, domestic savers and the stock market.
A few takes of hard statistics from the Committee’s communique should provide clarity and confidence about where we are and an insight into where we are headed thereby inspiring confidence in the Committee’s decision. Here we go:
“Headline inflation (year-on-year) rose marginally for the second consecutive month to 15.69 per cent in April 2026, from 15.38 per cent in the preceding month, largely driven by an increase in the food component.
“Food inflation rose to 16.06 per cent in April 2026 from 14.31 per cent in March, reflecting the high cost of transportation and other logistics, as well as seasonal factors.
“Core inflation, however, moderated to 15.86 per cent in April 2026, from 16.21 per cent in March. Similarly, the 12-month average inflation slowed to 19.16 per cent in April 2026, from 20.05 per cent in March, marking the sixth month of consecutive decline.
“Month‑on‑month, headline inflation also eased to 2.13 per cent in April 2026, compared with 4.18 per cent in March 2026, reflecting moderation in both food and core components.
“Real GDP grew by 4.07 per cent in the fourth quarter of 2025, compared with 3.98 per cent in the preceding quarter, supported by expansion in industry and agriculture sectors.
“The non-oil sector grew by 3.99 per cent (year-on-year) in Q4 2025 from 3.91 per cent in the preceding quarter, driven by key activities in the Services sector including information & communication, and transportation & storage activities.
“Growth in the oil sector also increased to 6.79 per cent in Q4 2025 from 5.84 per cent in the previous quarter, on the back of improved refining in the downstream sector.
Gross external reserves remained robust at US$49.49 billion as of 15th May 2026 compared with US$48.35 billion at end‑March 2026, sufficient to cover 9.04 months of imports for goods and services. This strong buffer continues to reinforce investor confidence in the Nigerian economy and support exchange rate stability.
These statistics do not in any way spell doom nor do they mirror Eldorado. We must keep our eyes on the ball to ensure steady progress, not engage in populist adventurism that could end in sob stories.
As we move closer to the season of electoral campaigns ahead of the 2027 national elections which are usually characterised by jumbo spending that could lead to a liquidity spiral, it is pertinent to emphasise the need for fiscal authorities to step up to the plate to avert any untoward consequences.
The primary focus of the Committee is price stability with the full compliment of soundness and resilience of the financial system and with current rates a return to disinflation trajectory is indicated, all things being equal. The Committee looks good on achieving its focus. As more institutions that prioritise common good over personal aggrandisement emerge, Nigeria will be a better place for us all.