CPPE Urges CBN to Cut Interest Rates After Holding MPR at 27.5%

– Think Tank Applauds CBN’s Decision to Pause Rate Hikes

– Calls for Reduction in CRR, Citing Global Comparisons

– Warns of Disconnection Between Financial System and Real Economy

The Centre for the Promotion of Private Enterprise (CPPE) has called on the Central Bank of Nigeria (CBN) to ease interest rates moving forward. This follows the apex bank’s decision to maintain the Monetary Policy Rate (MPR) at 27.5% during its latest meeting.

Backing the Monetary Policy Committee’s (MPC) choice to halt rate hikes, CPPE’s Chief Executive Officer, Muda Yusuf, stated that the move aligns with investor expectations and broader economic trends.

“This decision is reasonable considering the recently rebased inflation data, which now stands at 24.48%—lower than the MPR,” Yusuf said in an interview on Friday. “Maintaining the current rates prevents further strain on businesses and individuals with banking exposures.”

However, he emphasized the need for a shift in policy direction. “Going forward, we should see a gradual relaxation of these tightening measures, with interest rates easing at upcoming MPC meetings,” he added.

Yusuf also criticized Nigeria’s 50% Cash Reserve Ratio (CRR), labeling it the highest globally. “There is no justification for such an extreme level. The closest to Nigeria’s CRR is Turkey’s, which is just 25%,” he noted.

Additionally, he pointed out that the asymmetric corridor of +500/-100 basis points is excessively wide. “If the MPR is already at 27.5%, such a gap is unhealthy. Persisting on this path could sever the financial sector from the real economy, hindering growth,” he warned.

The CBN’s MPC, after its 299th meeting, retained the CRR for Deposit Money Banks at 50%, for Merchant Banks at 16%, and the Liquidity Ratio at 30%.

Three days prior, the National Bureau of Statistics reported a drop in Nigeria’s inflation rate to 24.48% following the rebasing of the Consumer Price Index (CPI).