Centre for the Promotion of Private Enterprise says rate reduction to 26.5% is growth-friendly but urges stronger policy transmission and fiscal discipline…
The Centre for the Promotion of Private Enterprise (CPPE) has welcomed the Central Bank of Nigeria’s (CBN) recent decision to lower the Monetary Policy Rate (MPR) by 50 basis points to 26.5 percent, describing it as a welcome shift from years of aggressive monetary tightening toward a more measured approach. The move, announced by CBN Governor Olayemi Cardoso, signals the bank’s cautious pivot toward supporting growth while maintaining stability.
In a statement released on February 24, 2026, CPPE’s Chief Executive Officer, Dr. Muda Yusuf, highlighted that the decision reflects improving macroeconomic fundamentals and reinforces confidence in the country’s stabilisation trajectory.
According to Dr. Yusuf, the easing is underpinned by several positive developments in the economy. Headline inflation has declined for eleven consecutive months, external reserves have strengthened thanks to higher export earnings and remittance inflows, and relative exchange-rate stability has helped anchor inflation expectations. Additionally, the country’s trade balance is showing signs of improvement, reflecting a stronger external sector performance. CPPE said these indicators signal growing resilience in Nigeria’s macroeconomic fundamentals and praised the CBN for a data-driven approach.
The centre further noted that the rate cut sends a positive signal to investors and the business community, supporting improved investor sentiment, gradual easing of financing conditions, and strengthening private-sector confidence. Yusuf emphasized that after years of high costs from energy, logistics, exchange rate volatility, and elevated interest rates, even modest monetary accommodation provides both psychological and financial relief for businesses.
However, the CPPE cautioned that the full benefits of monetary easing will depend on how effectively policy changes are transmitted to lending rates. Structural factors continue to keep borrowing costs high for businesses, including a high Cash Reserve Ratio (CRR), elevated deposit costs, risk premiums, crowding-out effects from government borrowing, and high operational costs within the banking system. Yusuf stressed that addressing these structural rigidities is essential to ensure that monetary easing translates into lower borrowing costs for manufacturers, SMEs, agriculture, and other productive sectors.
Fiscal vulnerabilities also remain a concern. Nigeria’s high public debt, ongoing fiscal deficits, and persistent budget financing challenges threaten macroeconomic stability. CPPE highlighted the need for stronger non-oil revenue mobilisation, rationalisation of government expenditure, improved fiscal transparency, credible deficit reduction strategies, and reduced reliance on high-cost domestic borrowing. Yusuf emphasized that monetary easing must be complemented by disciplined fiscal management and close coordination between fiscal and monetary authorities to sustain macroeconomic stability.
The centre also pointed to opportunities arising from the easing cycle for investors. Lower interest rates can enhance returns in fixed-income markets, while equity markets may benefit, particularly sectors such as banking, consumer goods, manufacturing, industrials, and construction. Real-sector investments, including agro-processing, manufacturing, export-oriented businesses, logistics, and infrastructure-related ventures, could see a more supportive environment. SMEs and private equity investors may also find improved prospects as financing costs moderate and macroeconomic sentiment strengthens. Sustained exchange-rate stability and growing reserves could further attract foreign portfolio flows into Nigeria’s financial markets.
Yusuf concluded that while the MPR reduction is a welcome and measured adjustment, strengthening monetary transmission and achieving credible fiscal consolidation remain critical to realising the full benefits. With structural reforms and disciplined fiscal management, CPPE believes the current policy direction could unlock a stronger investment cycle and more durable economic growth.
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