RFA Breakfast Paper - July 20, 2026

CBN Holds Interest Rate at 26.50% Amid Rising Inflation Risks

The Central Bank of Nigeria left its Monetary Policy Rate (MPR) unchanged at 26.50% at its May 20, 2026 meeting, following a 50-basis-point rate hike in February. The decision came at policymakers' first meeting since the outbreak of the Iran conflict, with Governor Olayemi Cardoso emphasizing the need for a cautious and vigilant monetary policy stance to anchor inflation expectations and preserve macroeconomic stability. The decision was made against a backdrop of rising inflation, with Nigeria's headline inflation accelerating for a second consecutive month to 15.7% in April, the highest level since November, reversing the disinflation trend that had persisted for eleven months. In addition to holding the policy rate steady, the central bank left all other key monetary policy parameters unchanged, maintaining the asymmetric corridor at +50/-450 basis points around the MPR, the Cash Reserve Ratio (CRR) at 45% for commercial banks and 16% for merchant banks, and the liquidity ratio at 30%. The decision signals the CBN's preference to assess the impact of previous tightening measures while remaining prepared to respond if inflationary pressures—particularly those stemming from higher energy prices and external geopolitical developments—become more persistent.

U.S. Equities Close Lower as Geopolitical Tensions Rise Ahead of Earnings Season

U.S. equities closed mostly lower on Monday as investors weighed renewed military tensions between the U.S. and Iran following an escalation over the weekend. Reports that both sides remained open to negotiations helped limit the market reaction, with the S&P 500 declining 0.2% while oil prices closed only modestly higher. Energy stocks were among the session’s top performers, supported by heightened geopolitical uncertainty, while communication services gained as Alphabet shares rose following reports that the company is developing a semiconductor to improve the efficiency of its Gemini AI models. Investor attention now turns to a busy earnings calendar, headlined by Alphabet and Tesla, which are scheduled to report on Wednesday. Their results and guidance could provide fresh insight into corporate demand and AI-related investment. Treasury yields also moved higher, with the 10-year yield rising to 4.59% and the 2-year yield reaching 4.21%. Overall, markets remain focused on the interaction between geopolitical developments and corporate earnings as investors assess the outlook for risk assets.

NGX Opens the Week Higher as Banking and Industrial Stocks Lead Rally

Nigerian equities began the new week on a strong footing, with sustained buying interest lifting the market across several medium- and large-cap stocks. Positive investor sentiment drove the NGX All-Share Index and market capitalization higher by 1.12% each, as gains across major sectors reinforced the market’s bullish momentum. Banking stocks led the advance, rising 3.14%, while the Industrial Goods sector added 2.82%, making them the strongest contributors to the session’s performance. The NGX-ASI gained 2,721.83 points to close at 246,183.96, while market capitalization increased by ₦1.76 trillion to ₦158.81 trillion. Market activity also strengthened during the session, pointing to increased investor participation and stronger trading momentum. Total volume and value traded rose by 24.17% and 16.19%, respectively, with approximately 851.63 million shares worth ₦49.59 billion exchanged across 56,873 deals. The combination of broad-based price appreciation and higher trading activity suggests that investors maintained a strong appetite for Nigerian equities as the new week began. The outperformance of banking and industrial stocks also indicates that demand remained concentrated in key large-cap segments, providing a strong foundation for the market’s continued upward momentum.