The Centre for the Promotion of Private Enterprise (CPPE) has commended the Central Bank of Nigeria (CBN) for reducing the Monetary Policy Rate (MPR) by 50 basis points to 26.5 per cent, describing the move as growth-supportive but cautioning that its full benefits will depend on stronger fiscal discipline and improved policy transmission.
In a policy brief signed by Muda Yusuf, its Chief Executive Officer on Tuesday, the CPPE said the decision by the apex bank’s Monetary Policy Committee signals a gradual shift from aggressive tightening toward measured monetary easing.
He noted that the rate cut reflects improving macroeconomic fundamentals, including sustained disinflation, improved external reserves, relative exchange-rate stability and a strengthening trade balance.
“The Centre for the Promotion of Private Enterprise (CPPE) welcomes the decision of the Monetary Policy Committee (MPC) of the Central Bank of Nigeria to reduce the Monetary Policy Rate (MPR) by 50 basis points to 26.5 percent.
“The announcement by the Governor, Olayemi Cardoso, marks a continuation of the gradual shift from aggressive monetary tightening toward measured easing.
“This policy direction is appropriate and growth-supportive. It reflects improving macroeconomic fundamentals and reinforces confidence in the economy’s stabilisation trajectory,” Yusuf said
According to the CPPE, the easing sends a positive signal to investors and the business community, boosting confidence and supporting expectations of gradual credit expansion.
Yusuf stated that while the moderation in the policy rate is a welcome development, structural constraints within the financial system could weaken its impact on the real economy.
He observed that despite adjustments in the MPR, lending rates to businesses remain elevated due to factors such as high Cash Reserve Ratio (CRR), elevated deposit costs, risk premiums linked to macroeconomic uncertainty, crowding-out effects from government borrowing, and high operating costs in the banking system.
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“Unless these rigidities are addressed, the benefits of monetary easing may not fully translate into lower borrowing costs for manufacturers, SMEs, agriculture and other productive sectors,” he stated.
The CPPE therefore called for measures to strengthen monetary transmission, including easing liquidity constraints, improving credit-risk frameworks and moderating domestic borrowing pressures.
Yusuf also stressed the need for credible fiscal consolidation to safeguard macroeconomic stability. He warned that elevated public debt levels, persistent fiscal deficits and heavy debt-service obligations continue to constrain fiscal flexibility.
Sustainable stability, he said, would require stronger non-oil revenue mobilisation, expenditure rationalisation, improved fiscal transparency, a credible deficit reduction strategy and reduced dependence on high-cost domestic borrowing.
The CPPE further noted that the easing cycle presents opportunities across fixed income, equities, real sector investments and private equity, especially if exchange-rate stability and reserve growth are sustained.
Yusuf added that while the CBN’s decision reflects strengthening economic fundamentals, coordinated fiscal and monetary reforms will be critical to unlocking a stronger investment cycle and more durable growth.
“However, for the benefits of monetary easing to be fully realised, two critical issues must be addressed:
“Strengthening monetary transmission to ensure lower lending rates for the real sector.
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“Advancing credible fiscal consolidation to safeguard macroeconomic stability.
“If supported by structural reforms and disciplined fiscal management, the current policy direction could unlock a stronger investment cycle and more durable economic growth,” he noted