Policy Meeting: CBN to Keep Interest Rate at 26.5% – Analysts
The Central Bank of Nigeria (CBN) is anticipated to keep the benchmark interest rate at 26.5% at the policy committee meeting this week, Broadstreet Investment firms said in a separate report.
The Monetary Policy Committee (MPC) will begin a two-day meeting for Sept this week to appraise macroeconomic developments since the last meeting in July.
The authority kept the monetary policy rate at 26.5% on the back of moderating headline inflation, the naira and financial market stability.
Nigeria’s macroeconomic indicators have improved since the last meeting, in contrast to global developments. Global economic conditions have become more challenging, with inflation concerns due to elevated oil prices.
Middle East war has pushed crude oil prices higher, increasing the risk of renewed inflationary pressures. The US Federal Reserve hiked rates by 25 basis points, and the European Central Bank and the Bank of England are anticipated to stay hawkish.
As a sizable net oil exporter of crude oil and an emerging producer of refined fuels, Nigeria is less exposed to the spillover effects from the Middle East conflict than most regional peers.
Since the last monetary committee meeting, inflation pressure has continued to ease, and the local currency, the naira, has remained stable amid fast growth in external reserves.
Headline inflation declined to 15.39% year on year in August from 15.43% in July, while core inflation eased to 13.29%. Food inflation also moderated, although it remained elevated at 19.57%, highlighting continued supply pressures.
In its update, Meristem Securities said that while recent disinflation provides room to maintain the current stance, the Committee is likely to seek further evidence of sustained improvement in food inflation, given risks from fiscal liquidity, festive demand and higher global oil prices.
At the same time, economic activity has strengthened. Real GDP growth accelerated to 4.43% year on year in Q2:2026 from 3.89% in Q1:2026, supported by stronger performances in both the oil and non-oil sectors.
The improvement continued into Q3:2026, with the CBN Composite PMI rising to 52.70pts in August from 51.10pts in July, the third consecutive month of expansion. Industry also returned to expansion, while services and agriculture remained key contributors.
External conditions also improved, with crude oil production reaching 1.68 million barrels per day (mbpd) in August and external reserves rising to USD54.7 billion.
The stronger reserve position and improved oil production provide additional support for FX stability and reduce near-term pressure from imported inflation.
“We expect the MPC to retain all policy parameters at its upcoming meeting, as continued global inflation risks, higher energy prices and recent tightening by the US Fed could keep the Committee cautious”, Meristem Securities Limited said.
Domestically, strong system liquidity and improved demand following the reopening of OMO auctions have pushed market yields lower, reducing the need for immediate policy easing.
While continued moderation in domestic inflation provides room for a potential easing, analysts at Meristem Securities said they still expect the Committee to maintain its current stance as it assesses the sustainability of the disinflation trend and the impact of higher global energy prices before making further adjustments.
Nigeria’s Foreign Reserves Rise to $54.41bn, Highest in 18-Year
