The Central Bank of Nigeria’s Monetary Policy Committee has lowered the interest rate by 50 basis points to 27 percent, a move welcomed by the Centre for the Promotion of Private Enterprise as a timely intervention for Nigerian businesses and the economy. This decision marks the first interest rate cut in three years and follows five consecutive months of disinflation in the country.
According to the Chief Executive Officer of the Centre for the Promotion of Private Enterprise, Muda Yusuf, the reduction in interest rates is a logical pivot towards growth, given the restored macroeconomic stability and slowed inflationary pressures. The high interest rates in recent quarters have constrained private sector credit, increased the cost of funds, and hindered business expansion.
By lowering the Monetary Policy Rate and Cash Reserve Requirement, the Central Bank of Nigeria aims to improve liquidity conditions, reduce borrowing costs, and unlock capital for productive sectors of the economy. This move is expected to expand banks’ capacity to create credit, lowering lending rates and making financing more accessible for businesses, particularly small and medium-sized enterprises.
The reduced cost of funds is anticipated to encourage new investments, support business expansion, and enhance capacity utilization in the real sector, ultimately stimulating output growth and job creation. Furthermore, the strengthened financial intermediation and more accommodative monetary environment will enable banks to fulfill their core function of mobilizing savings and channeling them into productive investments, reinforcing financial deepening and economic growth.
The Central Bank of Nigeria’s decision to cut interest rates is seen as a positive step towards supporting the country’s economic growth. With the economy having experienced a period of disinflation, the focus has shifted towards stimulating growth and supporting the private sector. The Centre for the Promotion of Private Enterprise believes that this move will have a positive impact on Nigerian businesses and the economy as a whole.