The Central Bank of Nigeria (CBN) has once again kept its benchmark interest rate at 26.5%, a decision that continues to fuel concerns among economists and business leaders over the high cost of borrowing. While the apex bank says the move is necessary to sustain the recent slowdown in inflation and maintain economic stability, many experts argue that businesses are paying the price, with borrowing costs remaining above 30% and limiting access to affordable credit.
The decision was announced after the 306th Monetary Policy Committee (MPC) meeting held in Abuja on July 20 and 21, 2026. By retaining the Monetary Policy Rate (MPR) and other key monetary policy indicators, the CBN signaled its commitment to fighting inflation and protecting the naira. However, analysts believe the prolonged tight monetary stance is making it increasingly difficult for businesses—particularly small and medium-sized enterprises (SMEs)—to expand, invest, and create jobs.
Several financial experts say the recent decline in inflation provides an opportunity for the CBN to begin considering gradual interest rate cuts. Thomas Amusan, CEO of Kwik Consulting, noted that while caution remains important, policymakers should start discussing a phased reduction in rates if inflation continues its downward trend. Manufacturing executive Sharon Nwosu also stressed that many businesses are now spending more on debt servicing than on production and innovation, warning that SMEs cannot thrive when loan interest rates remain above 30%.
Not all analysts share the same view. Economic analyst Hassan Oyeleke and investment banker Tunde Adeyemi believe maintaining the current rate reinforces investor confidence, strengthens exchange rate stability, and demonstrates policy consistency at a time of global economic uncertainty. According to them, easing rates too quickly could undermine the progress already made in reducing inflation, making a cautious approach the more responsible option despite the pressure from the private sector.
Interestingly, recent CBN data shows that private sector credit rose from ₦80.59 trillion in April to ₦81.04 trillion in May 2026, suggesting lending activity is still growing despite the expensive borrowing environment. The bank also retained the Cash Reserve Ratio (CRR) at 45% for commercial banks, 16% for merchant banks, and 75% for non-Treasury Single Account public sector deposits, while the Standing Facilities Corridor remained unchanged at +50/-450 basis points around the MPR. With inflation easing slightly to 15.91% in June and external reserves climbing above $52 billion—their highest level since 2009—many analysts believe the groundwork for future monetary easing is gradually being laid, although the CBN is expected to remain cautious until inflation shows a more consistent downward trend.
source: nairametrics
