Centre Hails CBN’s Decision To Hold Rates

The Centre for the Promotion of Private Enterprise (CPPE) has commended the Central Bank of Nigeria for retaining all key monetary policy parameters at its 305th Monetary Policy Committee (MPC) meeting.

CPPE said the decision reflects a pragmatic, measured and increasingly sophisticated understanding of the inflation dynamics currently confronting the Nigerian economy.

The MPC retained the Monetary Policy Rate (MPR) at 26.5 percent, maintained the asymmetric corridor around the MPR, retained the Cash Reserve Ratio (CRR) at 15 percent for merchant banks, 45 percent for deposit money banks and 75 percent for non-TSA deposits.

The director/CEO of CPPE, Dr. Muda Yusuf stated that “at a time of heightened global uncertainty and mounting geopolitical tensions, the decision of the MPC sends a powerful signal of policy maturity, strategic restraint and confidence in the direction of macroeconomic management.”

He noted that the current inflationary pressures are substantially structural and externally induced, saying that “the intensifying geopolitical tensions involving Iran, Israel and the United States have triggered fresh volatility in the global energy market, pushing up crude oil prices and transmitting severe cost pressures into domestic energy prices, transportation, logistics and manufacturing operations. Inflation at this time is being driven more by supply-side disruptions than by excess domestic demand.”

According to Yusuf, monetary policy is a powerful stabilisation instrument, but it cannot repair supply chains, resolve geopolitical conflicts or eliminate structural bottlenecks in production and distribution. Attempting to force down structural inflation solely through aggressive monetary tightening would amount to applying a monetary solution to a structural problem.

“The decision to hold rates therefore demonstrates a commendable recognition that excessive tightening at this stage could suffocate productivity, weaken industrial recovery, constrain investment appetite and undermine employment generation. Economies do not grow on the strength of high interest rates; they grow on the strength of productivity, enterprise, investment confidence and policy coherence.”

The CPPE commended the Central Bank for the increasingly disciplined management of the monetary policy architecture and the relative stability achieved in the foreign exchange market over recent months.

Yusuf disclosed that exchange rate stability has become one of the most important anchors of macroeconomic confidence in the economy, explaining that a stable currency environment improves investor sentiment, moderates imported inflation, enhances planning predictability and reduces speculative distortions within the market.

Yusuf added that the centre further applauds the seamless and non-disruptive implementation of the banking sector recapitalisation programme, noting that “the exercise has not triggered systemic anxiety, depositor panic, bank failures or significant erosion of shareholder confidence. This demonstrates regulatory maturity, improved supervisory capacity and careful management of transition risks by the Central Bank.

“The recapitalisation programme is not merely a banking reform exercise; it is fundamentally a strategy for building a stronger financial intermediation framework capable of supporting long-term industrialisation, infrastructure financing and economic transformation. Strong economies are built on strong financial systems”

Yusuf pointed out that the outcome of the 305th MPC meeting reflects a balanced and intelligent policy calibration, one that appropriately recognises that the ultimate objective of macroeconomic management is not merely to tame inflation statistics, but to create an environment that supports investment, productivity, competitiveness, industrialisation and sustainable job creation.