Wednesday, September 24, 2025 - On Tuesday, the Monetary Policy Committee (MPC) reduced the Monetary Policy Rate (MPR) by 50 basis points from 27.5 per cent to 27 per cent.
The Centre for the Promotion of
Private Enterprise (CPPE) has praised the Central Bank of Nigeria’s
decision to ease credit conditions, describing it as a timely shift towards growth after an extended period of tight monetary
policy.
On Tuesday, the Monetary Policy
Committee (MPC) reduced the Monetary Policy Rate (MPR) by 50 basis points from
27.5 per cent to 27 per cent. The committee also lowered the Cash Reserve Ratio
(CRR) for commercial banks from 50 to 45 per cent, while keeping the CRR for
merchant banks at 16 per cent and retaining the liquidity ratio at 30 per cent.
The asymmetric corridor around the policy rate was adjusted to +250/-250 basis
points.
A notable new measure was the
introduction of a 75 per cent CRR on non-Treasury Single Account public sector
deposits. According to the central bank, this aims to guard against excess
liquidity risks from fiscal operations that could destabilise price gains made
in recent months.
Muda Yusuf, chief executive of
the CPPE, said the easing came at the right time, as Nigeria has seen five
straight months of declining inflation. “Having restored a measure of stability
and slowed inflationary pressures, the MPC’s pivot toward growth is both
logical and timely,” he said.
He noted that high interest
rates in recent quarters had constrained private sector credit, raised the cost
of borrowing and weighed on business expansion. By cutting the policy rate and
CRR, Mr Yusuf argued that the central bank was deliberately working to improve
liquidity, reduce borrowing costs, and free up capital for productive sectors.
The CPPE highlighted four main
implications of the shift. It argued that improved credit conditions would
expand banks’ lending capacity and make financing more accessible, especially
for small and medium-sized firms.
Lower costs of funds would
encourage new investments, support expansion and raise capacity use in the real
sector, boosting jobs and output, adding that a more accommodative stance would
allow banks to play their role of mobilising savings and channelling funds into
productive investments, reinforcing growth.
The CPPE noted that the 75 per
cent CRR on non-TSA deposits was seen as a safeguard against fiscal-driven
liquidity that could upset the financial system.
The think-tank stressed that
fiscal authorities must complement the monetary easing to unlock the economy’s
potential. It called for sustained fiscal consolidation to maintain investor
confidence, priority investment in infrastructure to cut production and
logistics costs, stronger regulatory institutions to attract private capital,
and firm action on insecurity, which remains a significant drag on rural
productivity and investment.
“The MPC’s decision represents a
strategic and well-timed policy shift from stabilisation to growth
acceleration,” Mr Yusuf said. “If sustained and complemented by appropriate
fiscal and structural reforms, the measures will stimulate growth and jobs, improve
private sector output, expand government revenues through a broader tax base,
and moderate inflation sustainably in the medium to long term.”
The CPPE described the move as a
step in the right direction towards building a more resilient and inclusive
Nigerian economy.
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