The Chartered Institute of Bankers of Nigeria (CIBN) anticipates that the Central Bank of Nigeria (CBN) will maintain its benchmark interest rate at 26.5% following the conclusion of the Monetary Policy Committee's (MPC) 306th meeting.
Dr. Dele Alabi, CIBN President and Chairman of Council, shared this projection in an interview with the News Agency of Nigeria on Saturday in Lagos, ahead of the MPC's deliberations starting Monday in Abuja.
CIBN's Rationale for a Hold
Dr. Alabi stated that the CIBN's expectation for a hold is based on the CBN's inflation-targeting framework and current economic data. He noted that neither provides a compelling reason for a rate adjustment at this time.
He remarked, “I expect the MPC to keep the interest rate constant and monitor developments over the next couple of months before considering any adjustment.” This approach, he added, would allow the apex bank to assess evolving inflationary pressures and broader economic conditions.
Expert Support for Maintaining Rates
Professor Akpan Ekpo, an economist and former MPC member, also advised the committee to hold the policy rate. He highlighted global uncertainties, such as tensions involving the United States and Iran, which could temporarily increase crude oil prices and intensify inflationary pressures in Nigeria.
Professor Ekpo argued that such developments are likely to be temporary and should not warrant an immediate increase in interest rates. He urged the MPC to maintain the current policy rate while closely monitoring both domestic and global economic developments.
Beyond monetary policy, Professor Ekpo advised the Federal Government (FG) to increase investment in productive sectors to strengthen economic growth and improve overall stability. He also urged policymakers to consider recommendations from the Manufacturers Association of Nigeria to support production and sustain economic expansion.
CBN's Recent Monetary Policy Stance
The CBN has maintained a cautious monetary policy stance in recent months. At the conclusion of its 305th MPC meeting on May 20, the apex bank retained the Monetary Policy Rate (MPR) at 26.5%.
The committee also left the Cash Reserve Ratio (CRR) unchanged at 45% for commercial banks and 16% for merchant banks. Additionally, it retained the Standing Facilities Corridor at +50/-450 basis points around the MPR and kept the CRR on non-TSA public sector deposits at 75%.
These decisions were aimed at preserving tight monetary conditions amidst renewed inflationary pressures, following consecutive increases in headline inflation in March and April. The CBN sought to provide more time to evaluate the impact of earlier policy measures on price stability.
Standard Chartered's Contrasting Outlook
The CIBN's projection comes days after Standard Chartered Plc. indicated it expects the CBN to reduce interest rates. Nairametrics reported that Standard Chartered Plc. projected the CBN would cut interest rates by only 150 basis points in 2026.
This revised forecast, detailed in an investment note by Razia Khan, Chief Economist for Africa and the Middle East at Standard Chartered, anticipates the Monetary Policy Rate (MPR) to close 2026 at 25%. The bank also raised its average inflation forecast for 2026 to 15.5% from its previous estimate of 12%.
