- Aimed at curbing persistent inflationary pressures
The Central Bank of Nigeria (CBN) Monetary policy committee’s (MPC) Retention of the Monetary Policy Rate (MPR) at 26.50% will have varying effects on both the fixed income market and the equities market.
Cowry Assets in its weekly market review pointed that for financial markets, “the decision is expected to keep fixed income yields elevated in the near term, while equities may continue to witness sec- toral rotation as investors reassess earnings resilience under a high-interest rate environment”
Broadly, investors are likely to continue favouring short tenured fixed income instruments over duration-sensitive assets, while equities trading may re- main driven by sector-specific opportunities and defensive positioning.
Meanwhile, the outcome of the 305th Monetary Policy Committee (MPC) meeting of the Central Bank of Nigeria reflects a continued cautious and tight monetary stance aimed at curbing persistent inflationary pressures, despite recent moderation to 15.69%, amid improving exchange rate stability and sustained foreign portfolio inflows.
Key policy decisions include: Retention of the Monetary Policy Rate (MPR) at 26.50%; Retention of the Cash Reserve Ratio (CRR) at 45.0% for Deposit Money Banks and 16.0% for Merchant Banks; Retention of 75% CRR on Non-TSA public sector deposits; Liquidity Ratio maintained at 30.0%; Asymmetric corridor retained at +50/- 450 basis points around the MPR.
The decisions of the MPC were anchored on a comprehensive assessment of risks to the macroeconomic outlook.
Although inflation has risen marginally for two consecutive months, largely induced by external shocks, the Committee recognized the transitory nature of the uptick and remained confident that the current macroeconomic environment remains sufficiently resilient to support a gradual return to the disinflationary path.
The MPC’s decision marks a pause following the 50 basis points easing implemented at the previous meeting in February.
In line with broad market expectations, the MPC opted to retain the MPR at 26.50% alongside all other policy parameters.
This outcome aligns with earlier expectations of some analysts, including the Cowry Assets for a hold, premised on renewed inflationary pressures stemming from higher domestic energy costs linked to spillover effects from ongoing geopolitical tensions in the Middle East.
Nigeria’s headline inflation sustained its upward reversal for the second consecutive month in April 2026, rising to 15.69% year-on-year from 15.38% recorded in March, representing a 31 basis points increase.
This development signals a temporary interruption to the eleven-month disinflation trend previously recorded.
The renewed inflationary pressure was primarily driven by cost-push factors. Chief among these was the surge in global crude oil prices following disruptions around the Strait of Hormuz in early March, which affected global supply chains and elevated international energy prices.
The resultant increase in domestic fuel prices translated into higher transportation and production costs across major sectors of the economy.
Against this backdrop, the Committee considered emerging upside risks to inflation, alongside heightened global uncertainty, sufficient to justify maintaining a cautious monetary policy stance.
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