The Centre for the Promotion of Private Enterprise (CPPE) has backed the Central Bank of Nigeria’s (CBN) decision to retain all key monetary policy parameters at the 305th Monetary Policy Committee (MPC) meeting.
In a policy brief seen by Nairametrics, the CPPE described the decision as pragmatic and reflective of a more measured understanding of Nigeria’s inflation dynamics.
The MPC retained the Monetary Policy Rate (MPR) at 26.5%, while also maintaining the asymmetric corridor around the benchmark rate.
The Cash Reserve Ratio (CRR) was retained at 15% for merchant banks, 45% for deposit money banks, and 75% for non-TSA public sector deposits.
What they are saying
According to the CPPE, the MPC’s decision sends a strong signal of policy maturity and strategic restraint at a time of heightened global uncertainty and geopolitical tensions.
The centre noted that the ongoing tensions involving Iran, Israel, and the United States have intensified volatility in global energy markets, pushing up crude oil prices and increasing domestic cost pressures across transportation, logistics, and manufacturing.
- “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 stated that inflation in Nigeria is currently driven more by supply-side disruptions than by excess domestic demand.
The centre added that while monetary policy remains a powerful stabilisation tool, it cannot resolve structural bottlenecks, repair supply chains, or address geopolitical conflicts affecting prices.
The group maintained that tightening rates further could have negatively impacted investment and economic recovery efforts.
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The Central Bank of Nigeria said the decision to retain rates was influenced by persistent inflationary pressures and the need to sustain macroeconomic stability.
- The MPC retained the Monetary Policy Rate at 26.5%.
- The Cash Reserve Ratio was maintained at 45% for commercial banks and 16% for merchant banks.
- The Standing Facilities Corridor was also retained at +50/-450 basis points around the MPR.
The apex bank equally maintained the CRR on non-TSA public sector deposits at 75%.
The committee cited the recent back-to-back rise in inflation figures recorded in March and April 2026 as one of the key reasons for maintaining a cautious policy stance.
More insights
The CPPE also commended the Central Bank for maintaining relative stability in the foreign exchange market, describing it as a key anchor for macroeconomic confidence.
- “A stable currency environment improves investor sentiment, moderates imported inflation, enhances planning predictability and reduces speculative distortions within the market.”
- “Indeed, 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.”
The centre further praised fiscal authorities for efforts toward fiscal consolidation and improved revenue performance.
CPPE also applauded the implementation of the banking sector recapitalisation programme, noting that the process has so far avoided systemic panic, depositor anxiety, or significant shareholder losses.
According to the group, the recapitalisation programme represents a broader strategy aimed at strengthening financial intermediation to support industrialisation, infrastructure financing, and long-term economic transformation.
It, however, urged the CBN to maintain clear communication with the few banks still dealing with recapitalisation-related transition issues to preserve depositor confidence and overall financial system stability.
What you should know
Beyond the decision to retain rates, the CBN disclosed that Nigeria’s gross external reserves rose to $49.49 billion as of May 15, 2026, up from $48.35 billion recorded at the end of March.
CBN Governor Olayemi Cardoso said the reserve level is sufficient to cover more than nine months of imports for goods and services.
According to him, the reserve position continues to strengthen investor confidence and support exchange rate stability in the economy.
