Nigeria’s business community and leading economists have thrown their support behind the Central Bank of Nigeria’s decision to maintain the Monetary Policy Rate (MPR) at 26.5 per cent, describing it as a necessary step to protect the economy from rising global uncertainties. The decision, announced by CBN Governor Olayemi Cardoso after the Monetary Policy Committee’s 306th meeting in Abuja, marks the second consecutive meeting in which the benchmark rate has been left unchanged.
According to the apex bank, the decision was driven by concerns over renewed geopolitical tensions in the Middle East and their potential impact on global energy prices and domestic inflation. Although Nigeria’s headline inflation rate eased slightly to 15.91 per cent in June from 15.93 per cent in May, policymakers believe it is too early to begin loosening monetary policy, especially with external risks still threatening economic stability.
Business leaders acknowledged that high interest rates continue to increase borrowing costs and place pressure on manufacturers and small-scale industries. However, many argued that maintaining the current rate is preferable to making changes that could destabilise recent economic gains. Dr Muda Yusuf of the Centre for the Promotion of Private Enterprise noted that ongoing tensions in the Middle East could worsen inflationary pressures, while small business representatives stressed the need to preserve stability despite the challenges facing businesses.
Economists also backed the MPC’s cautious stance, pointing to the resilience shown by the Nigerian economy despite global headwinds. Analysts highlighted improving domestic conditions, including stronger economic growth, increased foreign reserves, and signs of renewed business activity. The CBN reported that external reserves rose to $52.52 billion in July, while the country’s GDP expanded by 3.89 per cent in the first quarter of 2026, reflecting continued momentum in key sectors of the economy.
Despite their support for the rate hold, industry stakeholders are already looking ahead to possible cuts if inflation continues to decline. Manufacturers say lower borrowing costs will be essential for boosting investment, expanding production, and improving competitiveness. Cardoso reaffirmed the CBN’s commitment to bringing inflation down to single digits and maintaining economic stability, while warning that a prolonged escalation of the Middle East conflict remains the biggest threat to the country’s economic outlook. The committee is expected to review its next policy decision at its September meeting.
source: punch
