CBN slashes MPR to 23%, CPPE sees growth boost but warns of risks
CBN cut the Monetary Policy Rate by 350 basis points to 23 percent from 26.5 percent following its 307th Monetary Policy Committee meeting on Tuesday, also adjusting the asymmetric corridor around the MPR from +50/-450 to +50/-300 basis points. The Centre for the Promotion of Private Enterprise welcomed the move as a significant shift from the prolonged restrictive monetary policy regime, saying it signals a rebalancing toward growth, investment and recovery while preserving price and financial-system stability.
The rate cut aims to reduce financing costs for businesses, especially in manufacturing, agriculture, construction and logistics, where high borrowing costs have constrained investment and working capital. CPPE said it could lower the cost of capital, improve cash flows, stimulate investment and strengthen productive capacity, and could also ease the Federal Government’s domestic debt-service burden, creating fiscal space for infrastructure, health, education and security. However, the benefits depend on banks passing the lower policy rate to borrowers and on managing foreign-exchange risks that may arise from Nigeria’s easing stance while some major central banks keep raising rates.
CPPE cautioned that lower interest rates alone will not deliver sustainable recovery without structural interventions in energy, logistics, insecurity, food production, infrastructure and regulatory costs, and urged complementary fiscal and structural policies. With Nigeria’s external position stronger—reserves up, FX market more stable—the CBN can use open market operations to manage volatility. Will banks actually lower lending rates, and how should businesses and investors plan for cheaper credit amid possible FX pressure and the need for broader reforms?