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Ikechi Nzeako
The Centre for the Promotion of Private Enterprise (CPPE) has welcomed the decision of the Central Bank of Nigeria (CBN) to maintain all key monetary policy parameters at the 305th meeting of the Monetary Policy Committee [MPC].
According to a statement signed by Dr Muda Yusuf Chief, Executive Officer of the centre, “The decision reflects a pragmatic, measured and increasingly sophisticated understanding of the inflation dynamics currently confronting the Nigerian economy.”
It would be recalled that the MPC retained the Monetary Policy Rate (MPR) at 26.5 percent, maintained the asymmetric corridor around the MPR, and retained the Cash Reserve Ratio [CRR] at 15 percent for merchant banks, 45 percent for deposit money banks and 75 percent for non-TSA deposits.
The economic think-tank posited that at a time of heightened global uncertainty and mounting geopolitical tensions, “The decision of the MPC sends a powerful signal of policy maturity, strategic restraint and confidence in the direction of macroeconomic management.”
It argued that the current inflationary pressures are substantially structural and externally induced, adding that the intensifying geopolitical tensions involving Iran, Israel and the United States have triggered fresh volatility in the global energy market, pushing up crude oil prices and transmitting severe cost pressures into domestic energy prices, transportation, logistics and manufacturing operations.
It said that monetary policy is a powerful stabilisation instrument, but stated that it cannot repair supply chains, resolve geopolitical conflicts or eliminate structural bottlenecks in production and distribution. The centre stated that attempting to force down structural inflation solely through aggressive monetary tightening would amount to applying a monetary solution to a structural problem.
“The decision to hold rates therefore demonstrates a commendable recognition that excessive tightening at this stage could suffocate productivity, weaken industrial recovery, constrain investment appetite and undermine employment generation. Economies do not grow on the strength of high interest rates; they grow on the strength of productivity, enterprise, investment confidence and policy coherence,” CPPE added.
The CPPE organization commended the Central Bank for the increasingly disciplined management of the monetary policy architecture and the relative stability achieved in the foreign exchange market over recent months, adding that the exchange rate stability has become one of the most important anchors of macroeconomic confidence in the economy.
According to the centre, the recent policy direction of the Central Bank reflects a transition from crisis management to confidence management — a development that is critical for restoring macroeconomic credibility and rebuilding investor trust in the Nigerian economy.
It also commended the fiscal authorities for the renewed commitment to fiscal consolidation and improved revenue performance. The sustainability of macroeconomic stability ultimately depends on the quality of fiscal discipline. Rising revenues should translate into lower fiscal deficits, reduced dependence on debt financing and stronger fiscal buffers.
The CPPE further applauds the seamless and non-disruptive implementation of the banking sector recapitalisation programme, noting that the exercise has not triggered systemic anxiety, depositor panic, bank failures or significant erosion of shareholder confidence.
It said that the recapitalisation programme is not just a banking reform exercise but “fundamentally a strategy for building a stronger financial intermediation framework capable of supporting long-term industrialisation, infrastructure financing and economic transformation. Strong economies are built on strong financial systems.”
However, argued that “the outcome of the 305th MPC meeting reflects a balanced and intelligent policy calibration — one that appropriately recognises that the ultimate objective of macroeconomic management is not merely to tame inflation statistics, but to create an environment that supports investment, productivity, competitiveness, industrialisation and sustainable job creation.”
