…as CPPE applauds review, calls for strict transmission to commercial lending rates
The Central Bank of Nigeria yesterday reviewed its benchmark interest rate, the Monetary Policy Rate (MPR) downward by 350 basis points, bringing it down to 23 per cent from 26.5 per cent.
Announcing the decision on Tuesday following the 307th meeting of the Monetary Policy Committee, CBN Governor Olayemi Cardoso stated, “The Committee decided as follows: reset the monetary policy rate to 23 per cent.”
He revealed that the apex bank has been able to raise the country’s foreign reserves to $55 billion.
Alongside the rate cut, the apex bank recalibrated the asymmetric corridor around the MPR from +50/-450 basis points to +50/-300 basis points and reported that the country’s foreign reserves have successfully climbed to $55 billion.
The policy adjustment occurs against the backdrop of improving domestic macro-indicators, notably a consecutive decline in Nigeria’s inflation rate over July and August 2026, easing to 15.39 per cent in August from 15.43 per cent in July.
The move has drawn immediate praise from the Centre for the Promotion of Private Enterprise (CPPE), which welcomed the recalibration as a timely and significant turning point in the monetary policy cycle.
In a policy brief released on Tuesday, CPPE Chief Executive Officer Dr. Muda Yusuf described the adjustment as largely unexpected and noted that it corrects a widening misalignment between the previous 26.5 per cent MPR, an inflation rate of roughly 15.4 per cent, and prevailing money-market rates of around 20 per cent.
According to Dr. Yusuf, the bold policy pivot signals an essential rebalancing toward supporting economic recovery, investment, and growth.
Addressing the impact on businesses, Dr. Yusuf emphasized that the decision offers major relief for the real sector, where high financing costs have long constrained manufacturing, agriculture, construction, and logistics.
However, he warned that the ultimate economic value depends entirely on transmission, stating that the CPPE expects banks to reflect the new environment by progressively adjusting lending rates downwards on both new and existing facilities.
The CPPE further noted that the policy has positive fiscal implications by potentially reducing the marginal cost of government borrowing and easing the heavy domestic debt-service burden, thereby freeing up fiscal space for infrastructure, education, security, and healthcare.
While acknowledging potential risks of portfolio-flow reversals due to divergent global interest rates, Dr. Yusuf pointed out that Nigeria enters this easing phase from a robust external position, bolstered by strong foreign reserves and greater exchange-rate stability.
He however cautioned that monetary easing must be reinforced by supply-side reforms, urging authorities to tackle structural challenges such as energy costs, logistics bottlenecks, insecurity, and food-production constraints.
Concluding the brief, Dr. Yusuf asserted that the ultimate success of the policy will be judged by four key outcomes: the extent of the reduction in commercial lending rates, the response of private investment and credit to productive sectors, the behavior of inflation, and the continued stability of the foreign-exchange market.