July 17, 2026/Cordros Report
The Monetary Policy Committee (MPC) of the Central Bank of Nigeria will hold its 306th meeting on 20 – 21 July 2026. We believe the mix of developments since May – inflation tilting higher, a relatively stable naira, robust external reserves and resilient economic growth – points overwhelmingly to the MPC maintaining the status quo. Globally, major central banks have shifted towards a wait-and-see stance, providing little impetus for a change in direction. Domestically, inflation remains elevated but contained, growth is robust, external reserves are at a high level, and the naira has been relatively stable. All in, we expect a HOLD decision from the MPC at the meeting, maintaining the monetary policy rate at 26.50% while keeping other parameters constant.
Inflation – High but in Band
Headline inflation moderated slightly to 15.91% y/y in June 2026 (May: 15.93% y/y), primarily due to a moderation in energy costs and sustained naira stability. Notwithstanding, inflation risks remain tilted to the upside given the recent uptick in oil prices and naira volatility. However, given that inflation print currently sits within the CBN’s 14.5%-18.5% tolerance band, we believe this will support the MPC’s decision to maintain the status quo while monitoring any emerging price and currency pressures.
Growth – Regaining Momentum
Real gross domestic product (GDP) grew 3.89% y/y in Q1-26 (Q1-25: +3.13% y/y), led by services and a strong agriculture rebound. We estimate Q2-26 growth at 4.20% y/y driven by the main harvest season, further easing in cost pressures, and improved crude oil production (June: 1.74 mb/d vs May: 1.70 mb/d). A firm growth backdrop reduces the pressure to ease on growth grounds.
FX & Reserves – a Stronger Buffer Restored
While we note recent volatility in the naira primarily due to seasonal demand, we assess that the naira has remained relatively stable, retaining a YTD appreciation of c.3.4% to NGN1,382.18/USD. This has been supported by the CBN’s measured intervention, a still-resilient FPI, and autonomous inflows. The gross external reserves have also sustained accretion, reaching a 17-year high of USD51.89 billion (+13.9% YTD) as of 15 July, reinforcing confidence in the naira’s near-term stability. Therefore, in a bid to maintain carry premium, preserve reserve accretion and ultimately reinforce the naira stability, the MPC is likely to keep interest rates at current levels.
Global – Major Central Banks Hold Rates
Major central banks have shifted towards a wait-and-see stance. The Fed (3.50% – 3.75%) and the Bank of England (3.75%) both held, while the European Central Bank (ECB) hiked by 25bps (2.25%) due to energy-driven inflation. The MPC is likely to follow the Fed/BoE hold consensus rather than the ECB’s tightening move, given Nigeria’s contained backdrop.
For investors, these signals continue to support carry-trade dynamics and yield stability in the near term, with the next opportunity for a policy pivot most likely at the November 2026 meeting if inflation resumes its downward trajectory.