CBN Set to Maintain Tight Monetary Policy as Inflation and Global Oil Shock Deepen Pressure on Economy
Financial analysts and economists are widely expecting the Central Bank of Nigeria (CBN) to maintain its current tight monetary policy stance at its upcoming Monetary Policy Committee (MPC) meeting, as the economy grapples with rising inflation and weakening business activity.
According to a report by Meristem Securities Limited, policymakers are likely to adopt a cautious “wait-and-see” approach, balancing conflicting signals from persistent inflationary pressure and slowing economic growth. The MPC meeting is scheduled to hold on May 19 and 20, 2026.
The analysts explained that while inflation continues to rise—reaching 15.69% year-on-year in April, largely driven by food prices—economic activity is weakening. Nigeria’s Purchasing Managers’ Index (PMI) fell below the 50-point threshold to 49.40, indicating contraction in key sectors such as manufacturing and services due to high energy and transport costs.
On the inflation outlook, Futureview Research noted that although price pressures remain elevated, there are early signs of stabilisation in monthly inflation trends. However, it warned that risks remain high due to transport costs, foreign exchange pressures, insecurity in food-producing regions, and rising energy expenses, all of which could keep prices elevated in the coming months.
Global developments are also adding pressure. Escalating geopolitical tensions, particularly conflict involving the United States and Iran and disruptions in the Strait of Hormuz, have pushed crude oil prices sharply higher, with Brent crude averaging around $119 per barrel in April. This global oil shock has raised transport and fuel costs, increasing inflation risks worldwide and limiting central banks’ room for rate cuts.
Against this backdrop, Meristem expects the CBN to hold its key policy rates steady. The firm projects the Monetary Policy Rate (MPR) to remain at 26.50%, alongside unchanged parameters for the asymmetric corridor, cash reserve ratio, and liquidity ratio, as policymakers focus on anchoring inflation expectations while preserving financial stability.
source: Punch