Economist Supports CBN’s Rate Hold, Cites Strengthened Policy Maturity, Economic Stability

The Centre for the Promotion of Private Enterprise (CPPE) has commended the Central Bank of Nigeria (CBN) for retaining all key monetary policy parameters at its 305th Monetary Policy Committee (MPC) meeting, describing the decision as evidence of strengthened policy maturity and growing macroeconomic stability.

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

According to CPPE, the decision reflects a pragmatic and increasingly sophisticated understanding of the inflation dynamics confronting the Nigerian economy.

The Director of CPPE, Dr. Muda Yusuf, said the stance of the monetary authorities demonstrates policy discipline and confidence in ongoing macroeconomic adjustments.

“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,” Yusuf said.

He explained that current inflationary pressures are largely structural and externally driven, noting that global geopolitical tensions involving Iran, Israel and the United States have contributed to volatility in energy markets and rising production costs.

“Inflation at this time is being driven more by supply-side disruptions than by excess domestic demand,” he said.

Yusuf stressed that monetary policy, while critical for stabilisation, cannot resolve structural bottlenecks or supply chain disruptions, warning that excessive tightening could undermine productivity and investment.

“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,” he added.

He further noted that the Central Bank’s approach reflects a balanced policy calibration aimed at sustaining economic recovery while managing inflation pressures.

The CPPE also commended the CBN for improved foreign exchange market stability, describing it as a key anchor of investor confidence and macroeconomic predictability.

Yusuf said exchange rate stability has helped moderate imported inflation, improve planning certainty for businesses, and reduce speculative pressures in the market.

He also praised the ongoing banking sector recapitalisation exercise, noting that it has been implemented without systemic disruption.
“The exercise has not triggered systemic anxiety, depositor panic, bank failures or significant erosion of shareholder confidence. This demonstrates regulatory maturity and improved supervisory capacity,” he said.
According to him, the recapitalisation programme is a long-term reform designed to strengthen financial intermediation and support industrialisation and infrastructure financing.

Yusuf concluded that the outcome of the MPC meeting reflects a broader policy direction focused not only on inflation control, but also on sustaining investment, productivity, competitiveness, and job creation.