\n\n• Seek improved credit flow to real sector amid restrictive interest rate environment
• Lament high interest rate can’t grow economy, call for productivity-led growth
James Emejo in Abuja, Nume Ekeghe and Dike Onwuamaeze in Lagos
Members of the Organised Private Sector (OPS) and financial analysts have welcomed the Central Bank of Nigeria’s (CBN) 50-basis-point reduction in the Monetary Policy Rate (MPR), describing it as a cautious but positive step after a prolonged tightening campaign aimed at curbing inflation.**
The Monetary Policy Committee (MPC) voted to cut the benchmark interest rate to 26.5 per cent, down from 27 per cent. Briefing journalists after the two-day meeting in Abuja, CBN Governor Mr. Olayemi Cardoso said the decision was based on a balanced evaluation of inflation risks, noting that the ongoing disinflation trajectory was expected to continue.
However, while applauding the move, stakeholders expressed concern that the prevailing interest rate environment remains restrictive for the real sector, limiting access to affordable credit and stifling expansion plans.
ACCI: A Cautiously Optimistic Step
President of the Abuja Chamber of Commerce and Industry (ACCI), Chief Emeka Obegolu, described the rate cut as a “cautiously optimistic step toward easing financial pressures on businesses and supporting economic recovery.”
Obegolu noted that the adjustment signalled growing confidence in Nigeria’s disinflation trajectory and macroeconomic stabilisation. He also highlighted the importance of the asymmetric corridor adjustment around the MPR, calling it a technical but essential reform aimed at improving interbank market efficiency.
“The chamber anticipates that the policy mix will reduce financing costs and improve credit availability to the real sector, support private sector expansion and job creation, sustain exchange rate stability and investor confidence, as well as encourage prudent fiscal liquidity management and transparency,” Obegolu said.
He urged continued coordination between monetary and fiscal authorities to ensure that easing financial conditions translate into real sector growth, and called for targeted credit interventions, infrastructure improvements, and regulatory reforms to lower the cost of doing business.
LCCI: A Positive Signal for Investors
Director-General of the Lagos Chamber of Commerce and Industry (LCCI), Dr. Chinyere Almona, praised the CBN’s shift from aggressive monetary tightening to a stabilisation phase anchored on disinflation, exchange rate convergence, and improving supply-side conditions.
Almona described the move as a “cautious, positive step in the right direction,” adding that the rate reduction was a critical confidence signal to the OPS, establishing a pathway towards a gradual reduction in the cost of capital.
“Beyond this action, we expect to see improved policy predictability, strengthened real return expectations, and support for medium-term investment planning, particularly in manufacturing, agro-processing, local drug production, and export-oriented industries,” she stated.
The LCCI also called for increased credit to the private sector for productive activities, investment in critical infrastructure, continued transparency in the FX market, and strong support for building local refining capacity in oil, gas, and solid minerals.
Almona expressed optimism that with firm coordination between monetary and fiscal authorities, the Nigerian economy could achieve GDP growth above five per cent in the short term.
CFG Advisory: Lingering Caution, Need for Productivity-Led Growth
Chief Executive of CFG Advisory, Mr. Tilewa Adebajo, interpreted the modest rate cut as evidence of lingering caution within the MPC over the durability of disinflation trends.
“My own thoughts really are that the MPC still doesn’t have confidence in the disinflation situation. The key focus for the economy right now, in our own opinion, is the urgency of now. Reform gains need to now move from reform gains to productivity-led growth,” Adebajo said.
He warned that the prevailing interest rate environment remains restrictive for the real sector, with government securities—including Treasury bills and OMO bills—trading between 18 and 22 per cent, keeping borrowing costs elevated.
“The current high interest rates regime cannot grow the economy, as the real sector still cannot lend. This remains a cause for concern,” he stressed.
Adebajo also noted that by the next MPC meeting in May, half the year would already be gone, narrowing the window for meaningful stimulus. However, he pointed out that approaching election cycles could inject short-term stimulus through campaign-related spending, which reaches the grassroots without necessarily stoking inflation.
“The key thing for me now is that we need to start moving this economy into productivity-led growth. And it cannot grow at four per cent. We need to start growing this economy at eight to 10 per cent per annum,” he added.
FXTM: Rate Cut Unlikely to Weaken Naira
Senior Market Analyst at FXTM, Lukman Otunuga, said the rate reduction was unlikely to undermine the Naira and could reinforce recent gains in the foreign exchange market.
“The CBN’s decision is likely to have a stabilising and even potentially positive impact on the Naira, which has gained six per cent year-to-date,” Otunuga stated.
He attributed this to growing investor confidence, improved foreign exchange liquidity, and rising external reserves—now at a 13-year high—which provide a solid buffer for the local currency.
Otunuga noted that even with the 50-basis-point cut, real interest rates remained elevated when adjusted for inflation, preserving Nigeria’s yield appeal.
“Most importantly, Nigeria’s interest rate is still one of the highest in Africa, which may attract foreign portfolio investors, lending the Naira further support,” he said.
Agusto & Co: A Signal of Gradual Unwinding
Head of Financial Institutions Ratings at Agusto & Co, Ayokunle Olubunmi, described the apex bank’s move as a signal of its willingness to gradually unwind its tight stance.
“The 50bps reduction in the MPR is a signal that the monetary authority is willing to reduce the prevailing rates. The rate cut also reflects the perception that while inflation pressure is easing, the decline does not justify a significant reduction in the prevailing rate,” Olubunmi explained.
