The Central Bank of Nigeria (CBN) has reaffirmed its commitment to bringing inflation down to single digits by early 2027, even as global instability, particularly the resurgence of hostilities in the Middle East, complicates the disinflation process. Speaking at the end of the 306th Monetary Policy Committee (MPC) meeting in Abuja on Tuesday, CBN Governor Olayemi Cardoso expressed confidence that the bank's policies are yielding results, despite modest progress.
Interest Rate Held at 26.5% Amid Global Uncertainties
The MPC retained the benchmark interest rate at 26.5 per cent for the second consecutive meeting this year, citing the recent escalation of conflicts in the Middle East as a key factor. Nigeria's headline inflation rate eased slightly to 15.91 per cent in June, down from 15.93 per cent in May, according to the National Bureau of Statistics (NBS). This marginal decline follows a period of rising inflation triggered by a global oil price surge in February after the Middle East conflict intensified.
Inflation had been on a downward trend through 2025 and into early 2026, but the external shock reversed the trajectory. Nigeria's headline inflation rate rose for three consecutive months: 15.38 per cent in March, 15.69 per cent in April, and 15.93 per cent in May. Cardoso noted that the monetary tightening measures implemented over the past two years are beginning to deliver results, but the external shocks have complicated the disinflation process.
Cardoso: Policies Are Bearing Fruit
“Again, I think it’s appropriate to remember where we are coming from. Eleven months of disinflation, and quite frankly, from every indication, we were expecting that by early 2027, we would be where we want to be in terms of inflation and firmly on track for single digits. Unfortunately, these were shocks that were not anticipated in that manner and have gone on a lot longer than could have been anticipated,” Cardoso said.
Despite the challenges, the CBN governor emphasized that the institution intends to deepen and strengthen its policies to contain rising inflation and achieve the single-digit target. “We are pleased on two counts. One is the fact that inflation has moderated, albeit slightly. That indicates that the tools we have implemented so far are bearing fruit. Secondly, collaboration between the fiscal and the monetary authorities at a time like this cannot be overemphasised. We intend to deepen and strengthen that collaboration to ensure we can contain rising inflation and bring it into the single digits we have said earlier. We continue to stand by that,” he stated.
Fiscal-Monetary Collaboration Key
The governor highlighted that the moderation in headline inflation demonstrates that the central bank’s policy tools are working. He added that closer collaboration between fiscal and monetary authorities would be critical to containing inflationary pressures arising from external developments. The CBN remains focused on its target, despite the unanticipated shocks from the Middle East conflict, which have prolonged the disinflation timeline.
