Naira to dollar
Ola Wale
The naira held its ground after the Central Bank of Nigeria decided to keep the Monetary Policy Rate unchanged at 26.5% following the 305th meeting of the Monetary Policy Committee in Abuja. All 11 members present voted for the hold, signaling that the apex bank sees no immediate need to tighten or loosen policy despite recent upticks in inflation. Governor Olayemi Cardoso announced the decision on Wednesday, stressing that it was based on a full review of domestic and external risks to the economy.
The MPC also left other key parameters untouched. The asymmetric corridor around the MPR remains at +500 and -450 basis points, while the Cash Reserve Ratio stays at 45% for Deposit Money Banks and 16% for Merchant Banks. Public sector deposits not covered by the Treasury Single Account are still subject to a 75% CRR. By holding everything steady, the committee is signaling continuity in its approach to managing liquidity and credit conditions in the banking system.
The decision comes after inflation edged up for the second month running, hitting 15.69% in April compared to 15.38% in March. The rise was largely linked to external shocks, including higher global fuel prices that filtered through to domestic transport and food costs. The committee acknowledged the increase but described it as transitory, expressing confidence that the current macroeconomic setup can support a return to disinflation in the coming months.
Cardoso said the committee’s cautious stance is aimed at anchoring inflation expectations and safeguarding macroeconomic stability. He noted that premature easing could reverse gains made in stabilizing the naira and taming price pressures. The CBN had cut the rate by 50 basis points in February after holding it steady in November 2025, so this marks the second consecutive meeting without a change.
Markets reacted calmly to the announcement, with the naira trading around ₦1,373.34 to the dollar at the official window shortly after the decision. The relative stability reflects a combination of steady reserves and reduced volatility in the foreign exchange market. Gross external reserves rose to $49.49 billion as of May 15, equivalent to more than nine months of import cover, giving the CBN more room to defend the currency if needed.
For households and businesses, the hold means borrowing costs will remain elevated. Commercial banks typically adjust lending rates in line with the MPR, so loans for mortgages, working capital, and personal credit stay expensive. On the other side, savers and investors in fixed-income instruments continue to benefit from higher yields, which the CBN views as necessary to attract inflows and support the naira.
The committee also flagged ongoing monitoring of global developments, particularly energy price volatility and geopolitical tensions that could feed into domestic inflation. It reiterated that monetary policy alone cannot resolve supply-side pressures and called for better coordination with fiscal authorities to address structural issues in agriculture, logistics, and power that drive costs higher.
By maintaining the rate at 26.5%, the CBN is walking a tight line between controlling inflation and avoiding a sharper slowdown in growth. The policy choice suggests confidence that recent reforms and reserve accumulation have created enough buffer to ride out short-term shocks. The next few months will show whether inflation resumes its downward trend and whether the naira can hold its current range without renewed pressure from external markets.
