 retained the Monetary Policy Rate (MPR) at 26.5%, the decision reflected more than caution.){kind=link}
ANALYSIS: Between MPC Decisions and Nigeria’s Macroeconomic Stability
By Kabir Abdulsalam
When the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) retained the Monetary Policy Rate (MPR) at 26.5 per cent following its 305th meeting, the decision reflected more than caution. It underscored a commitment to consolidating gains from one of Nigeria’s most ambitious economic reform periods in recent history.
Under the leadership of Governor Olayemi Cardoso, the CBN has pursued a strategy focused on restoring macroeconomic stability, strengthening investor confidence, rebuilding external reserves, and anchoring inflation expectations. While the journey has not been without challenges, recent economic indicators suggest the reforms are beginning to yield measurable results.
The decision to hold rates steady came as headline inflation rose slightly to 15.69 per cent in April 2026 from 15.38 per cent in March. However, the apex bank maintains that the increase was driven largely by temporary external shocks, including the impact of geopolitical tensions in the Middle East that pushed up global energy and logistics costs.
Beyond the headline figures, policymakers see encouraging signs. The 12-month average inflation rate declined to 19.16 per cent in April from 20.05 per cent in March, marking the sixth consecutive month of moderation. Month-on-month inflation also eased significantly to 2.13 per cent from 4.18 per cent.
For the CBN, these trends reinforce the argument that the current monetary stance is helping to gradually tame inflationary pressures while preserving confidence in the economy.
Cardoso and members of the MPC argue that Nigeria today possesses stronger macroeconomic buffers than it did a few years ago. Reforms in the foreign exchange market, stronger reserve accumulation, fiscal consolidation efforts, and the ongoing banking sector recapitalisation programme have collectively improved the economy’s resilience against external shocks.
At the heart of the CBN’s strategy is the belief that sustainable economic growth cannot occur without stability.
For years, businesses operated in an environment characterised by exchange-rate distortions, uncertainty in foreign exchange access, rising inflation, and declining investor confidence. While high interest rates have attracted criticism, policymakers insist that restoring stability is a necessary foundation for long-term prosperity.
The challenge, however, is balancing inflation control with the financing needs of businesses.
Small and medium-sized enterprises (SMEs), manufacturers, and retailers continue to face elevated borrowing costs. Access to affordable credit remains a concern for firms contending with energy costs, logistics expenses, and changing consumer spending patterns.
Yet, policymakers argue that sustainable growth ultimately depends on a stable macroeconomic environment. Unchecked inflation and exchange-rate volatility often impose greater long-term costs on businesses than temporary monetary tightening.
During discussions following the MPC meeting, concerns were raised about the impact of high interest rates on private-sector credit. Cardoso acknowledged these concerns but pointed to signs of improvement.
According to the governor, lending to SMEs increased significantly in April, particularly within the retail segment, indicating growing confidence among financial institutions. He also highlighted ongoing efforts involving development finance institutions, telecommunications regulators, and the Global Standing Instruction framework to improve credit access and strengthen financial inclusion.
The broader question facing policymakers is whether Nigeria can sustain stability while maintaining economic momentum.
On this front, recent indicators offer reasons for optimism. The economy has continued to expand despite tighter monetary conditions. Investor confidence has shown signs of improvement, while reforms in the foreign exchange market have enhanced transparency and liquidity.
Cardoso has repeatedly rejected claims that the naira is being artificially supported through large-scale interventions, arguing instead that improved market liquidity has reduced the need for direct CBN participation.
According to the governor, daily foreign exchange market turnover has grown substantially compared to levels recorded before the reforms, reflecting increased confidence and improved market efficiency.
This development is particularly significant because exchange-rate stability remains central to inflation management. A more stable and transparent foreign exchange market reduces uncertainty for businesses, investors, and consumers alike.
While some economists continue to advocate a broader mix of fiscal and structural interventions alongside monetary policy, there is increasing recognition that the reforms have begun to strengthen the country’s economic fundamentals.
The debate is no longer whether reforms are necessary, but how quickly their benefits can spread across the broader economy.
For now, the evidence points to a gradual strengthening of Nigeria’s economic foundations. Inflation pressures are moderating, reserves are improving, foreign exchange market liquidity has deepened, and economic growth remains resilient.
Challenges remain, particularly in ensuring affordable financing for businesses and accelerating the transmission of macroeconomic gains to households. However, Cardoso’s strategy appears increasingly focused on ensuring that today’s difficult decisions translate into tomorrow’s sustainable prosperity.
Economic transformation is rarely painless. Yet. history suggests that countries that successfully restore stability often create the conditions for stronger and more inclusive growth. Nigeria may well be moving along that path.
Kabir Abdulsalam writes from Abuja and can be reached via: [email protected]