Analysts Predict CBN May Retain Interest Rate At 26.5% Amid Inflation Concerns

Ahead of the Monetary Policy Committee (MPC) meeting of the Central Bank of Nigeria (CBN) scheduled for Tuesday, May 19, 2026, analysts have projected that the committee may retain the Monetary Policy Rate (MPR) at 26.5 per cent as inflationary pressures persist despite signs of moderation in monthly price movements.

Recent Consumer Price Index (CPI) data released by the National Bureau of Statistics (NBS) showed that inflation rose to 15.69 per cent year-on-year in April 2026 from 15.38 per cent recorded in March, marking the second consecutive monthly increase after nearly a year of sustained disinflation.

Analysts attributed the renewed inflationary pressure largely to rising energy costs and tensions in the Middle East, which pushed global crude oil prices higher and increased domestic consumer prices.

The latest Purchasing Managers Index (PMI), which contracted to 49.4 points in April 2026, has also raised concerns over slowing economic activity and the possibility of weaker Gross Domestic Product (GDP) growth in the near term.

Despite these growth concerns, analysts believe the MPC may adopt a cautious approach by maintaining current rates to sustain price stability and preserve investor confidence.

According to analysts at Cordros Research, the committee is expected to hold policy parameters steady while assessing the broader implications of inflationary developments and global economic uncertainties.

“We expect the committee to consider the spillover effects of recent global developments in its deliberations. At this meeting, we anticipate a hold stance on policy rates, aligning with the Central Bank of Nigeria’s commitment to maintaining price stability and supporting economic growth,” the firm stated.

Cordros projected that the MPC would retain the MPR at 26.50 per cent and leave other policy parameters unchanged.

The research firm noted that the expected decision reflects the cautious posture of major global central banks, renewed domestic inflationary pressures, and relatively stable exchange rate conditions.

Analysts also pointed out that although inflation has risen in recent months, it remains within the CBN’s formal tolerance band of 14.5 per cent to 18.5 per cent, giving the committee room to maintain its current monetary stance while monitoring future economic developments.

“We expect the Committee to acknowledge the recent uptick in headline inflation over the last two months. While the y/y inflation trend warrants monitoring, though still within the CBN’s formal tolerance band of 14.50% – 18.50% for 2026, the m/m moderation underscores the absence of acute price pressures that would compel immediate policy tightening. As a result, we expect the Committee to preserve the flexibility to HOLD the MPR (at 26.5%).”

Similarly, analysts at Quest Merchant bank note that the recent reversal in the disinflation trend and prevailing global uncertainties would likely compel the monetary authorities to maintain a cautious stance.

“Looking ahead, we expect the monetary authorities to adopt a wait and see approach, given the recent reversal in disinflation progress driven by domestic energy related shocks and heightened global uncertainty,” the analysts stated.

“Consequently, we anticipate that the MPC will maintain the policy rate at 26.50 per cent,” they added.