External Reserves Rise To $52.5bn As MPC Retains 26.5% Interest Rate

Nigeria’s gross external reserves have climbed to $52.52 billion, as the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) retained the Monetary Policy Rate (MPR) at 26.5 per cent, opting to sustain its cautious monetary policy stance amid persistent global uncertainties.

Addressing journalists after the 306th MPC meeting in Abuja on Tuesday, CBN Governor Olayemi Cardoso said the committee unanimously voted to leave all key monetary policy parameters unchanged after assessing domestic economic conditions and emerging global risks.

Cardoso disclosed that the country’s gross external reserves increased from $50.47 billion at the end of May 2026 to $52.52 billion as of July 17, 2026, representing a 4.06 per cent increase within the period. Since the beginning of the year, reserves have risen by $6.96 billion, or 15.3 per cent, from $45.56 billion.

He attributed the improvement largely to crude oil-related tax receipts and third-party inflows, noting that the reserves are sufficient to finance approximately 11 months of imports of goods and services, far exceeding the international benchmark of 3 months.

According to Cardoso, the MPC considered the moderation in headline inflation in June 2026, improved foreign exchange market stability and the resilience of the Nigerian economy, but decided that maintaining the current policy stance remained the most appropriate response to prevailing economic conditions.

The committee retained the Monetary Policy Rate at 26.5 per cent, the asymmetric corridor around the MPR at +500/-100 basis points, the Cash Reserve Ratio (CRR) at 45 per cent for Deposit Money Banks and 16 per cent for Merchant Banks, while leaving the liquidity ratio and Non-TSA public sector deposits at 75 per cent unchanged.

Cardoso said the committee also considered renewed geopolitical tensions in the Middle East and their potential impact on global energy prices and domestic inflation.

“Notwithstanding these developments, available evidence suggests that the Nigerian economy has remained largely resilient to external shocks, reflecting the gains from prior reforms implemented by the fiscal and monetary authorities. Maintaining the current monetary policy stance will provide an opportunity to closely monitor incoming data and assess the trajectory of economic developments to guide future policy decisions,” he said.

The CBN governor warned that risks to global inflation remain elevated due to rising crude oil and commodity prices, supply chain disruptions, climate-related shocks affecting food production, exchange rate volatility and fiscal pressures across emerging and developing economies.

He noted that stronger coordination between fiscal and monetary authorities would further enhance macroeconomic stability, adding that recent collaboration between both authorities had helped cushion the domestic impact of the Middle East crisis.

Looking ahead, Cardoso expressed optimism that Nigeria’s economy would remain resilient in 2026, supported by improved crude oil production, expansionary Purchasing Managers’ Index (PMI) readings and the positive effects of ongoing policy reforms.

He projected that inflation would continue to ease over the medium term, driven by sustained stability in the foreign exchange market, the delayed impact of previous monetary tightening and improved food supply as the harvest season approaches.

“The key risk to the outlook, however, remains a severe and prolonged escalation of the Middle East conflict. In light of these considerations, the Committee reaffirmed its commitment to preserving price and financial system stability and remains prepared to take appropriate policy measures guided by evolving macroeconomic conditions,” he said.

Cardoso also expressed confidence that inflation would decline to the CBN’s single-digit target by 2027.

“From every indication, we expect that by early 2027 we would be where we want to be in terms of inflation and firmly on track for single digits. Inflation has moderated, albeit slightly, and that gives us confidence that the policy measures implemented so far are yielding results,” he stated.

On the naira, Cardoso reaffirmed the apex bank’s commitment to a transparent, liquid and market-driven foreign exchange system based on a willing buyer-willing seller framework.

He said sustaining exchange rate stability would depend on stronger economic fundamentals, including increased oil and non-oil exports, higher foreign direct investment and improved domestic productivity to reduce import dependence.

Commenting on the recent slowdown in bank lending, Cardoso described it as a temporary adjustment following the end of regulatory forbearance, noting that banks were recalibrating their loan portfolios and strengthening capital buffers.

“As banks raise more capital, build stronger buffers and strengthen their capacity, lending will return to levels commensurate with their size and capabilities. What we are seeing reflects a transition to a more sustainable and higher-quality credit environment. The banking system remains safe and sound, and credit growth will recover over time,” he added.