The Centre for the Promotion of Private Enterprise (CPPE) has applauded the Central Bank of Nigeria (CBN) and its Monetary Policy Committee (MPC) for taking steps to relax credit conditions in the economy.
According to CPPE’s Chief Executive Officer, Muda Yusuf, the move signals a turning point after several months of strict monetary tightening aimed at controlling inflation. He noted that the new approach demonstrates a stronger commitment to stimulating growth and investments.
At its latest meeting, the MPC reduced the Monetary Policy Rate (MPR) from 27.5% to 27%, while adjusting the asymmetric corridor around it to +250/-250 basis points. The committee also slashed the Cash Reserve Ratio (CRR) for commercial banks by 500 basis points to 45%, leaving merchant banks at 16% and maintaining the liquidity ratio at 30%.
A fresh measure introduced was the imposition of a 75% CRR on non-TSA public sector deposits, designed to manage liquidity pressures stemming from government transactions.
Yusuf stressed that this decision comes at a time when inflation has consistently declined for five months, reflecting that earlier interventions are beginning to pay off.
“Having restored a measure of macroeconomic stability and slowed inflationary pressures, the MPC’s pivot toward growth is both logical and timely.
“High interest rates in recent quarters have significantly constrained private sector credit, increased the cost of funds, and weighed on business expansion. By lowering the MPR and CRR, the CBN is deliberately working to improve liquidity conditions, reduce borrowing costs, and unlock capital for productive sectors of the economy,” he explained.
He added that the policy shift would allow banks to extend more credit at lower rates, making funds more accessible to small and medium enterprises (SMEs) and other businesses. This, according to him, would stimulate investments, boost production, and create jobs.
“A more accommodative monetary environment will enable banks to fulfil their core function of mobilising savings and channelling them into productive investments, reinforcing financial deepening and economic growth.
“The decision to impose a 75 per cent CRR on non-TSA public sector deposits is a prudent measure to prevent excessive fiscal-driven liquidity injections from destabilising the financial system,” Yusuf said.
The CPPE boss, however, emphasised that monetary easing alone is not sufficient. He urged the government to complement these efforts with fiscal interventions, particularly in infrastructure, institutional reforms, and security, to unlock the country’s full economic potential.
