Central Bank of Nigeria (CBN) Governor Olayemi Cardoso has voiced serious concerns regarding the ongoing conflict in the Middle East, identifying it as a substantial threat to Nigeria’s economic stability.

Cardoso shared these remarks at the Monetary Policy Forum held in Abuja on Thursday.

The conflict between Iran and Israel has triggered a dramatic increase in global crude oil prices, pushing them beyond $100 per barrel. This surge is exacerbated by disruptions in the critical Strait of Hormuz shipping lane.

Consequently, Nigerian petrol prices have seen a sharp rise, now standing at N1,350 per litre.

Cardoso acknowledged Nigeria's progress in building stronger reserves, a more resilient banking system, and enhanced payment infrastructure. However, he stressed that challenges persist.

The CBN's current focus is on consolidating economic gains, particularly by steering inflation towards a single-digit rate, maintaining exchange-rate stability, and strengthening reserve buffers.

Looking ahead, global economic growth is projected at 3.3% for 2026. However, this forecast could be negatively impacted by tight financial conditions, the lingering effects of monetary tightening, and ongoing geopolitical tensions.

Cardoso stated, “The Middle East crisis, with its impact on oil price volatility, constitutes a major risk.”

Meanwhile, in South Africa, the central bank has decided to keep its policy rate unchanged at 6.75%. This decision stems from caution due to rising energy prices, linked to the U.S.-Iran conflict, which are expected to drive inflation higher.

The South African Reserve Bank (SARB) announced the decision on Thursday, highlighting concerns over global shocks affecting the local economy.

Prior to the conflict, South Africa's inflation had been contained, slowing to the SARB’s 3% target in February.

However, anticipated fuel price hikes and a weaker rand are expected to cause inflation to accelerate in the coming months.

SARB Governor Lesetja Kganyago explained the bank’s cautious approach to rate setting.

Kganyago noted, “We warned of elevated risks, and we have been proceeding cautiously in our rate setting. Now a crisis has hit, this prudent approach is proving appropriate.”

The central bank anticipates headline inflation to climb to approximately 4% soon, with fuel inflation potentially surpassing 18% in the second quarter.

Kganyago added that the SARB’s projection model suggests interest rates will remain unchanged for an extended period, delaying anticipated cuts.

The SARB’s decision to hold rates was unanimous among policymakers, indicating a shared view on the necessity of monitoring risks before implementing further adjustments.

Before the conflict, economists had predicted further policy easing by the SARB in 2026, as inflation pressures seemed to be under control.

Inflation had previously trended towards the 3% target, suggesting conditions for rate cuts.

As a net fuel importer, South Africa is particularly susceptible to global energy price spikes, which directly influence domestic inflation.

The rand has depreciated by over 6% against the U.S. dollar since the conflict began, reflecting investor apprehension regarding the country's exposure to global shocks.

The SARB considered two adverse scenarios for the Iran conflict, one lasting a few months and another extending over a year. Both scenarios indicate inflation remaining above the 3% target, with the more severe projection showing rates exceeding 5% and target alignment not expected until 2028.

The conflict has thus reshaped the central bank’s policy outlook, shifting from a path of easing to a more cautious stance.