The Centre for the Promotion of Private Enterprise (CPPE) has welcomed the Central Bank of Nigeria’s unexpected decision to slash the Monetary Policy Rate by 350 basis points, dropping it from 26.5% to 23%.
The policy shift, announced at the conclusion of the Monetary Policy Committee’s 307th meeting on Tuesday, marks a sharp break from the country’s prolonged restrictive monetary stance.
Alongside the benchmark rate cut, the committee revised the asymmetric corridor from +50/-450 basis points to +50/-300 basis points around the MPR.
In a policy brief released shortly after the decision, CPPE Chief Executive Officer Dr. Muda Yusuf described the adjustment as a timely and necessary reset.
He pointed out that an unsustainable misalignment had opened up between the previous 26.5% policy rate, headline inflation moderating toward 15.4%, and prevailing money-market yields hovering near 20%.
Yusuf noted that the move should be seen not simply as loose monetary easing, but as a long-overdue alignment of the policy rate with actual macroeconomic conditions.
The policy brief singled out the real sector as the primary beneficiary of the rate reduction. Sky-high commercial lending rates have long starved key productive segments, including manufacturing, agriculture, construction, and logistics, of working capital and long-term expansion funds.
Yusuf emphasized, however, that the economic dividends will materialize only if commercial lenders promptly pass on the rate cut through lower interest charges on both new and running loan facilities.
Beyond the private sector, the CPPE highlighted substantial fiscal relief for the Federal Government. Prolonged monetary tightening had significantly driven up domestic yields, ballooning sovereign debt-service obligations. Lower interest rates are expected to ease the government’s borrowing costs, unlocking vital fiscal resources for critical infrastructure, security, education, and healthcare spending.
Addressing potential external risks, the think-tank acknowledged that cutting domestic rates while some global central banks maintain restrictive policies could narrow yield differentials, creating risks of capital flight and currency pressure.
Yusuf argued that Nigeria’s improved foreign exchange reserves and stronger external buffers give the apex bank ample room to manage volatility through open market operations.
The CPPE concluded by emphasizing that cheaper credit must be accompanied by fiscal and structural interventions to tackle energy costs, security deficits, and logistics bottlenecks, cautioning that the ultimate success of the CBN’s move will be measured by falling commercial lending rates, private credit expansion, sustained disinflation, and naira stability.