Inflation: ‘Zero relief for Nigerians’ – Economists react as CBN holds interest rate at 26.50%

The CEO of Financial Derivative Company, Bismark Rewane, in an interview with Channels Television on Wednesday, said the CBN’s decision to hold the MPR rate was expected. 

DAILY POST reports that CBN’s interest rate holding had an instant reaction on the Nigerian stock market as investors recorded N1.62 trillion lost on Wednesday. 

Meanwhile, at the currency market, the Naira recorded a marginal gain of N0.5 on Wednesday and stood at N1,373.34 after days of depreciation in the official market. 

In exclusive separate interviews with DAILY POST, the CEO of SD & D Capital Management, Gbolade Idakolo, and a professor of accounting and finance at Lead City University, Godwin Oyedokun, explained the implications of CBN’s interest rate holding on businesses and Nigerians. 

According to Idakolo, CBN’s decision to hold rates is a cautious move amid global uncertainties. 

“The decision of the CBN to retain the interest rate at 26.50% is a very cautious decision given the present global economic trend caused by the war between the USA, Israel, and Iran. 

“Definitely, the causative factors of the present rise in inflation are temporary and could ease once normalcy returns to the global economy, especially oil trade and shipping. 

“The economic implications for Nigerians are very clear because presently there is no end in sight for food inflation caused by insecurity and logistic challenges. 

“The price of goods and services will also continue to move in an upward trajectory because of high shipping costs and crude oil prices. The Naira is also struggling to maintain balance with the dollar, so there is a tendency for the diminishing value of the Naira. 

“In all this, as the CBN struggles to stabilize the economy by strengthening the Naira and reducing inflation whilst rebuilding investors’ confidence, Nigerians will have to grapple with the multifaceted challenges affecting the economy,” he told DAILY POST.

On his part, Oyedokun said the CBN decision to hold interest is a cautious attempt to balance inflation control with economic stability amid Nigeria’s persistent economic challenges.

According to him, the decision may strengthen investor confidence and support the naira through attractive fixed-income yields, adding that it also means borrowing costs will remain high for businesses and households.

He noted immediate relief from the decision may remain limited as food prices, transportation costs, electricity challenges, and weak purchasing power are expected to persist in the short term.

“The decision of the Central Bank of Nigeria Monetary Policy Committee (MPC) to retain the Monetary Policy Rate at 26.50 percent reflects a cautious attempt to balance inflation control with economic stability amid Nigeria’s persistent economic challenges. 

“The CBN appears determined to sustain recent gains in exchange-rate stability and inflation moderation rather than risk premature monetary easing.

“While the decision may strengthen investor confidence and support the naira through attractive fixed-income yields, it also means borrowing costs will remain high for businesses and households. 

“Small and medium-scale enterprises, manufacturers, and investors are likely to continue facing difficulties accessing affordable credit, which could slow business growth, job creation, and economic expansion.

“For ordinary Nigerians, immediate relief may remain limited as food prices, transportation costs, electricity challenges, and weak purchasing power are expected to persist in the short term. However, the policy could help prevent inflationary pressures from worsening if complemented by effective fiscal reforms and improved economic coordination.

“Ultimately, monetary policy alone cannot resolve Nigeria’s structural economic problems. Sustainable recovery will require improved security, a stable power supply, infrastructure development, enhanced agricultural productivity, and policies that reduce the cost of doing business. 

“The MPC’s decision, therefore, represents a cautious ‘wait-and-see’ approach aimed at preserving macroeconomic stability while broader reforms gradually take effect,” he told DAILY POST.