Nigeria’s central bank has kept its benchmark lending rate unchanged at 26.5 percent, signalling confidence that recent inflationary pressures will ease in the coming months despite rising consumer prices and external shocks.
The Monetary Policy Committee of the Central Bank of Nigeria (Central Bank of Nigeria) said Wednesday that it was maintaining a cautious stance to anchor inflation expectations and support macroeconomic stability.
Governor Olayemi Cardoso said recent increases in inflation were viewed as temporary and driven largely by external factors, including higher fuel costs linked to global geopolitical tensions.
Headline inflation rose to 15.69 percent year-on-year in April, marking a second consecutive monthly increase, according to official data.
Cardoso told reporters that the committee considered the inflation spike to have a “transitory nature,” adding that underlying reforms were expected to restore a disinflationary path over time.
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The decision follows a 50-basis-point rate cut at the previous meeting in February, reflecting a more flexible but still cautious monetary policy stance.
Economists had largely expected the central bank to hold rates steady, citing persistent inflation risks and uncertainty in global energy markets.
Nigeria’s economy has faced sustained pressure from currency volatility, fuel subsidy reforms and higher import costs, all of which have contributed to inflationary pressures in recent years.
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Analysts say food prices remain a key driver of inflation, with fuel costs continuing to feed through into transport and distribution expenses across the economy.
Despite these challenges, officials said recent policy reforms and improved investor sentiment have helped stabilise parts of the financial system.
Credit rating agency S&P Global Ratings (S&P Global Ratings) recently upgraded Nigeria’s sovereign outlook, citing improving macroeconomic fundamentals and reform momentum.
It projects modest but steady per capita income growth over the coming years, reversing a decade of economic contraction trends.
The central bank also noted that the impact of global geopolitical tensions, including the Middle East conflict, has so far been limited on Nigeria’s domestic economy, though it continues to monitor risks closely.
Market analysts said the rate pause could help support investor confidence in local currency assets, particularly government securities, as foreign portfolio inflows show signs of gradual recovery.
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Nigeria’s monetary authorities are expected to continue balancing inflation control with growth support as the country navigates a complex mix of domestic reforms and external shocks.
