August 10, 2026/InvestmentOne Report
The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) retained the Monetary Policy Rate at 26.50% at its July meeting, while also keeping the Standing Facilities Corridor at +50/-450bps around the MPR, the Cash Reserve Ratio at 45.00% for deposit money banks and 16.00% for merchant banks, and the CRR on non-TSA public-sector deposits at 75.00%.
The decision followed a mixed June inflation print released during the month. From the report, Headline inflation moderated marginally to 15.91% year-on-year from 15.93% in May, while core inflation eased more visibly to 15.92% from 16.82%. Food inflation, however, accelerated to 17.52% from 16.96%, reinforcing the committee’s preference to keep policy restrictive despite the improvement in underlying price pressure.
Looking ahead, we expect the domestic fixed income market to retain a modest bullish bias, although the pace of yield compression should be slower after the sizeable July rally. Liquidity is likely to remain an important support as OMO maturity and other government-related inflows recycle cash into the system, but the CBN’s continued use of OMO sales and CRR debits should limit an unchecked fall in money-market rates.
On the policy front, the marginal decline in headline inflation and stronger moderation in core inflation improve the medium-term case for easing, but the rise in food inflation and renewed oil-price volatility mean the CBN is likely to remain cautious. For Treasury bills, strong demand for the 364-day instrument should continue to support the secondary market, although the sizeable Q3 issuance program may keep primary-market stop rates relatively sticky.
For bonds, the reduced supply signalled in the revised Q3 issuance calendar should remain supportive, particularly at the belly and long end. Overall, we expect yields to trend lower in August, with the main upside risks coming from renewed inflation pressure, aggressive liquidity sterilization and a further rise in global yields.
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