Nigeria’s economy is once again standing at a delicate point where the battle against inflation, exchange rate instability and high living costs remains central to government policy.
While inflation has slowed significantly compared to the sharp price increases Nigerians faced in 2024 and early 2025, new global pressures are beginning to test the country’s economic reforms.
At the end of its 305th meeting held last Tuesday and Wednesday, the Monetary Policy Committee (MPC) of the Central Bank of Nigeria decided to retain the Monetary Policy Rate at 26.5 per cent. The committee also retained other major monetary policy parameters, including the Cash Reserve Ratio for banks and the standing lending and deposit facilities.
The decision signals that the apex bank is not yet ready to begin lowering interest rates despite complaints from businesses and households over expensive borrowing costs.
The committee believes inflationary pressures have not completely disappeared and that loosening policy too early could reverse the gains already achieved.
For ordinary Nigerians, the decision means lending rates are likely to remain high for now. Loans for businesses, mortgages and consumer credit may continue to attract elevated interest charges.
However, the CBN believes keeping rates high remains necessary to prevent another wave of inflation and exchange rate instability.
The latest inflation numbers released by the National Bureau of Statistics show that headline inflation rose slightly to 15.69 per cent in April 2026 from 15.38 per cent in March.
Food inflation also climbed to 16.06 per cent from 14.31 per cent, mainly because of transportation costs, logistics challenges and seasonal factors affecting food supply.
Despite the increase, the CBN insists the current pressure is temporary and largely caused by external developments rather than weaknesses inside the domestic economy.
CBN Governor Olayemi Cardoso said the recent inflationary pressure was linked mainly to global disruptions, particularly tensions in the Middle East that pushed up energy prices internationally.
According to him, Nigeria would have suffered more severe economic consequences if reforms introduced over the past two years had not strengthened the economy.
The MPC said reforms such as exchange rate adjustments, tighter monetary policy, stronger foreign reserves, banking sector recapitalisation and fiscal consolidation have improved the country’s ability to absorb external shocks.
The committee maintained that these reforms helped reduce the pass-through effect of global commodity price increases into domestic inflation.
For many Nigerians, inflation remains the biggest economic concern because it directly affects food prices, transportation costs, school fees, rents and healthcare expenses. Even though inflation has slowed from previous peaks, the cost of living remains high across the country.
The CBN believes one major sign of improvement is the continued decline in average inflation over the past six months. The 12-month average inflation rate slowed to 19.16 per cent in April from 20.05 per cent in March, marking six consecutive months of decline.
Month-on-month inflation also slowed sharply to 2.13 per cent in April from 4.18 per cent in March, indicating that the pace of price increases may be moderating gradually.
Economic growth has also remained relatively strong despite difficult conditions. Nigeria’s Gross Domestic Product grew by 4.07 per cent in the fourth quarter of 2025 compared to 3.98 per cent in the previous quarter.
Growth came mainly from agriculture, industry, telecommunications, transportation and storage activities. The oil sector also improved because of stronger refining activities in the downstream petroleum industry.
The growth numbers suggest that the economy is expanding despite high interest rates and global uncertainties. However, many Nigerians still argue that economic growth has not yet translated into lower prices or improved purchasing power.
One of the strongest points in the MPC communiqué was the position of the apex bank on foreign exchange management and external reserves.
For years, Nigeria’s foreign exchange market has been one of the most volatile parts of the economy. Businesses struggled to access dollars, investors lost confidence and the naira suffered repeated depreciation.
Since the current reforms began, the CBN says conditions have improved considerably.
Cardoso rejected claims that the apex bank has been aggressively spending reserves to defend the naira artificially. According to him, the foreign exchange market is becoming deeper and more liquid, reducing the need for heavy intervention by the CBN.
Daily foreign exchange turnover reportedly rose from about 100 million dollars at the beginning of the reform period to roughly 550 million dollars currently.
At certain periods, turnover reportedly reached as high as one billion dollars in a single day.
The Governor explained that a more active market creates better liquidity and allows buyers and sellers to trade more efficiently without depending excessively on the central bank.
He disclosed that CBN intervention currently accounts for only about 1.2 to 1.3 per cent of total market turnover.
According to Cardoso, the foreign exchange market is now driven more by willing buyer-willing seller arrangements rather than direct administrative controls.
The governor said transparency and equal access to information have helped improve confidence in the market.
Nigeria’s gross external reserves rose to 49.49 billion dollars as of May 15, 2026 compared to 48.35 billion dollars at the end of March.
The reserves are enough to cover more than nine months of imports for goods and services.
Strong reserves are important because they help Nigeria defend its currency during external shocks, meet international obligations and reassure foreign investors that the country can manage economic pressures.
Cardoso said reserves had already recovered to levels recorded before recent disruptions linked to the Iran conflict and expressed confidence that they would continue improving.
Another major area discussed by the MPC was the banking sector recapitalisation programme.
The exercise required banks to raise fresh capital to strengthen their financial positions and improve their ability to support economic growth.
According to the CBN, the recapitalisation process ended with 33 banks successfully meeting the new capital requirements.
The apex bank described the exercise as relatively smooth and said it attracted strong investor confidence.
Cardoso disclosed that about 74 per cent of investors who participated in the recapitalisation exercise were Nigerians, while about 26 per cent were foreign investors.
The Governor said the successful completion of the exercise has strengthened the banking sector and improved the capacity of banks to support economic expansion.
The MPC also warned that the CBN must remain vigilant to address any risks that could emerge after recapitalisation.
Although most banks met the requirements, a few institutions are still dealing with legal and regulatory challenges. The CBN, however, assured Nigerians that operations in those banks continue normally.
The banking recapitalisation exercise is important because stronger banks are generally better positioned to provide loans to businesses, withstand financial shocks and support investments in key sectors of the economy.
Small and Medium Enterprises also featured prominently during discussions after the MPC meeting.
Many SMEs across Nigeria have struggled under high interest rates, rising operating costs, weak consumer demand and exchange rate volatility.
Cardoso admitted that elevated interest rates have constrained lending to small businesses.
However, he disclosed that new credit to SMEs increased to about N199 billion in April 2026 from N153 billion in March.
The Governor explained that banks are gradually becoming more willing to diversify lending beyond large corporate customers.
According to him, retail lending accounted for about 94.73 per cent of new credit facilities, while general commerce represented about 2.46 per cent.
Cardoso said improving access to credit for SMEs requires collaboration beyond the central bank alone.
He said institutions such as the Ministry of Industry, Trade and Investment, the Bank of Industry and fiscal authorities all have roles to play.
The apex bank also recently signed a Memorandum of Understanding with the Nigerian Communications Commission to reduce fraud and remove operational bottlenecks affecting SMEs and financial system users.
The CBN also cited the Global Standing Instruction framework as a tool helping lenders recover funds from defaulting borrowers.
The single obligor limit for Development Finance Institutions has also been increased to enable them provide more loans to SMEs.
Cardoso said the SME credit expansion programme remains a work in progress but added that willingness to support small businesses is growing steadily.
For millions of Nigerians who run small businesses, access to affordable credit remains one of the biggest economic challenges. Many entrepreneurs complain that borrowing costs remain too high for sustainable expansion.
The CBN’s decision to maintain interest rates therefore creates a difficult balancing act. On one hand, tight policy helps reduce inflation and stabilise the exchange rate. On the other hand, expensive credit can slow investment and business growth.
The apex bank believes inflation control must remain the priority for now because uncontrolled inflation hurts both households and businesses more severely over time.
Another issue addressed after the MPC meeting involved bank charges and customer complaints.
Many Nigerians regularly complain about deductions from their bank accounts, including transaction alerts, maintenance charges and stamp duties.
Cardoso clarified that the N50 stamp duty charge does not belong to banks but comes from tax authorities, while banks merely collect and remit the money.
He advised customers dissatisfied with deductions to first approach their banks before escalating complaints to the CBN.
According to him, the Consumer Protection Department of the apex bank handles unresolved complaints from bank customers.
The CBN has also established a committee involving customer experience executives from deposit money banks and major microfinance banks to improve service quality and resolve complaints more effectively.
Cardoso admitted that multiple transaction alerts often confuse customers and said the apex bank is studying ways to consolidate alerts to improve clarity.
The compliance department of the CBN is also reviewing how banks manage complaints and compensation processes.
Another major reform discussed during the post-meeting interaction was the introduction of the revised foreign exchange manual.
The new FX Manual is expected to take effect from June 1, 2026. According to the Governor, the manual is designed to improve transparency, consistency and openness in the foreign exchange market. The last major revision of the manual was carried out in 2017.
Cardoso said both digital and physical copies of the manual would be distributed freely to stakeholders to ensure wider access to information.
One major objective of the reform is to make it easier for exporters to repatriate export proceeds back into Nigeria.
The Governor said the reforms are also expected to improve flexibility and access to foreign exchange for businesses and individuals.
He disclosed that Nigerians can now use naira cards for international transactions without the previous requirement of frontloading foreign currency.
The apex bank said it would continue adjusting foreign exchange policies when necessary to improve efficiency and stability.
The Governor pointed to Nigeria’s recent sovereign rating upgrade by global rating agency S&P Global Ratings as evidence that international investors are beginning to regain confidence in the country’s reforms.
According to the MPC, the upgrade reflects stronger macroeconomic fundamentals and growing confidence in policy direction despite global economic uncertainties.
Globally, the MPC noted that many central banks are now proceeding cautiously because inflation remains stubborn in several countries.
The committee said geopolitical tensions, supply chain disruptions and elevated energy prices continue to threaten global growth.
Many emerging economies are also facing exchange rate pressures that could keep inflation elevated in the near term.
As a result, central banks across the world are slowing or pausing interest rate cuts until inflation becomes more stable.
For Nigeria, the MPC believes output growth will remain resilient in 2026 despite downside risks associated with Middle East tensions.
The committee also expects inflationary pressure to moderate gradually because of previous policy tightening, improved exchange rate stability and better food supply conditions. Still, the path ahead remains challenging.
Many Nigerians continue to demand lower food prices, cheaper transportation and improved purchasing power. Businesses want lower borrowing costs and easier access to credit, while investors are watching closely for signs of sustained policy consistency.
The CBN appears determined to continue its cautious approach until inflation slows more convincingly.
For now, the message from the apex bank is clear: protecting price stability and preserving confidence in the naira remain the top priorities, even if high interest rates continue to create short-term pain for businesses and consumers.
The next MPC meeting is scheduled for July 20 and 21, 2026, where policymakers are expected to review fresh inflation data, exchange rate developments and the impact of global economic conditions on Nigeria’s economy.
