The Centre for the Promotion of Private Enterprise (CPPE) has commended the Central Bank of Nigeria’s decision to keep interest rates unchanged, describing the outcome of the 305th Monetary Policy Committee (MPC) meeting as a balanced response to Nigeria’s inflation challenges.
In a statement issued on Wednesday, May 20, Chief Executive Officer of CPPE, Dr Muda Yusuf, said the decision to retain key monetary policy parameters showed a “pragmatic, measured and increasingly sophisticated understanding” of the country’s inflation realities.
The MPC had retained the Monetary Policy Rate (MPR) at 26.5 per cent, while keeping the asymmetric corridor around the benchmark rate and maintaining the Cash Reserve Ratio at 45 per cent for deposit money banks, 16 per cent for merchant banks and 75 per cent for non-TSA deposits.
According to Yusuf, the decision comes at a time of global uncertainty and heightened geopolitical tensions and signals “policy maturity, strategic restraint and confidence in the direction of macroeconomic management.”
He argued that Nigeria’s inflation pressures are largely structural and driven by external developments rather than excess domestic demand.
“The current inflationary pressures are substantially structural and externally induced,” Yusuf said.
He pointed to rising tensions involving Iran, Israel and the United States, which he said had increased volatility in global energy markets, raised crude oil prices and worsened domestic cost pressures through higher energy, transport, logistics and production costs.
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“Inflation at this time is being driven more by supply-side disruptions than by excess domestic demand,” he stated.
Yusuf stressed that while monetary policy remains an important stabilisation tool, it has limits in dealing with structural challenges.
“Monetary policy is a powerful stabilisation instrument, but it cannot repair supply chains, resolve geopolitical conflicts or eliminate structural bottlenecks in production and distribution,” he said.
“Attempting to force down structural inflation solely through aggressive monetary tightening would amount to applying a monetary solution to a structural problem.”
The CPPE chief said the decision to leave rates unchanged reflects recognition that further tightening could hurt productivity, weaken industrial recovery, discourage investment and affect job creation.
“Economies do not grow on the strength of high interest rates; they grow on the strength of productivity, enterprise, investment confidence and policy coherence,” he said.
Yusuf also praised the CBN’s handling of monetary policy and foreign exchange management, saying recent exchange rate stability has become a key pillar of macroeconomic confidence.
“A stable currency environment improves investor sentiment, moderates imported inflation, enhances planning predictability and reduces speculative distortions within the market,” he said.
According to him, the apex bank’s recent policy direction signals a move “from crisis management to confidence management,” which he described as important for restoring investor trust and macroeconomic credibility.
The CPPE further commended fiscal authorities for what it described as renewed commitment to fiscal discipline and stronger revenue performance, noting that sustainable macroeconomic stability depends on lower fiscal deficits, reduced debt reliance and stronger fiscal buffers.
Yusuf also applauded the implementation of the banking sector recapitalisation programme, saying the exercise had proceeded without causing panic among depositors or instability in the financial system.
“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,” he said.
However, he urged the CBN to sustain clear communication with banks still dealing with recapitalisation-related transition issues to preserve depositor confidence.
“Confidence remains the oxygen of the financial system,” Yusuf said.
He added that the outcome of the 305th MPC meeting reflected “a balanced and intelligent policy calibration” focused not only on inflation control but also on supporting investment, competitiveness, industrialisation and sustainable job creation.
Alex is a business journalist cum data enthusiast with the Pinnacle Daily. He can be reached via ealex@thepinnacleng.com, @ehime_alex on X