The Central Bank of Nigeria remains confident that inflation will resume its downward path in the near to medium term, supported by ongoing reforms, exchange rate stability and robust external reserves
The Central Bank of Nigeria has reaffirmed its confidence that inflation will return to a downward trajectory in the near to medium term, citing the positive effects of ongoing economic reforms, tighter monetary policy and improving macroeconomic conditions.
This outlook was shared in the bank’s Frequently Asked Questions on the Monetary Policy Committee meeting held on 19–20 May 2026, during which the committee decided to retain all major policy parameters, including the Monetary Policy Rate at 26.5 per cent.
The Cash Reserve Ratio was kept at 45 per cent for Deposit Money Banks and 16 per cent for Merchant Banks, with the asymmetric corridor maintained at +50/-450 basis points.
The MPC’s cautious, data-dependent stance aims to consolidate gains from previous tightening measures, anchor inflation expectations and safeguard stability amid global and domestic uncertainties.
Headline inflation rose marginally to 15.69 per cent year-on-year in April 2026 from 15.38 per cent in March, driven mainly by food prices, energy costs and transportation pressures.
Nevertheless, the CBN described the increase as temporary, pointing to encouraging underlying trends. Month-on-month headline inflation slowed to 2.13 per cent, core inflation moderated, and the 12-month average inflation rate fell to 19.16 per cent in April – marking the sixth consecutive month of improvement.
“This suggests that the medium- to long-term disinflationary path remains firmly in place and inflation persistence risks are declining,” the CBN stated.
External factors, such as the Middle East crisis affecting global energy and logistics, contributed to recent pressures, but the bank noted that Nigeria’s stronger domestic buffers limited the impact.
External reserves stood at $51.25 billion as of recent figures, up from $49.49 billion in mid-May, providing approximately 9.04 months of import cover.
Improved foreign exchange market conditions, enhanced liquidity and ongoing reforms have supported greater naira stability in recent months.
The successful conclusion of the banking sector recapitalisation exercise has also strengthened the financial system, resulting in 33 more resilient banks and attracting both domestic and international investors.
The CBN expressed confidence that these developments, combined with fiscal consolidation and better policy transmission, will bolster economic resilience and sustain the disinflation process.
A senior official familiar with the MPC deliberations highlighted the importance of sustained reforms: “Stronger fundamentals and robust external buffers position the economy well to navigate challenges while supporting a return to lower inflation.”
The latest update reflects the apex bank’s balanced approach to maintaining stability while fostering conditions for sustainable growth in Africa’s largest economy.
David Okere is a journalist and contributor to Freelanews.com, covering business, governance, public affairs, and human-interest stories with a commitment to accuracy, balance, and public interest reporting.
