…CPPE outlines implications for the economy
TUE SEPT 23 2025-theGBJournal|The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) cut its benchmark interest rate Tuesday for the first time since the advent of President Bola Tinubu’s administration, signally a gradual transition toward monetary easing.
The MPC members opted for a 50bps reduction in Monetary Policy Rate (MPR) to 27.0% from Previous 27.50%, matching markets expectations.
The asymmetric corridor around the MPR was adjusted to +250bps/-250bps from the previous +500bps/-100bps).
The MPC equally voted to reduce the CRR for Deposit Money Banks to 45.0% (Previous: 50.0%) and retain the CRR for Merchant Banks at 16.0%. While introducing a 75.0% CRR on non-Treasury Single Account (TSA) public sector deposits it retained liquidity rate at 30.0%.
Before President Tinubu assumed office in May 2023, the Central Bank of Nigeria’s Monetary Policy Rate was at 18.50%.
The Centre for the Promotion of Private Enterprise (CPPE) says the decision to cut the rates is a significant policy shift toward supporting growth and investment, following an extended period of aggressive monetary tightening to rein in inflation.
A notable new measure was the introduction of a 75 percent CRR on non-TSA public sector deposits, aimed at containing excess liquidity risks that could arise from fiscal operations.
”The decision to impose a 75 percent CRR on non-TSA public sector deposits is a prudent measure to prevent excessive fiscal-driven liquidity injections from destabilizing the financial system,” the Private think-tank said.
”This action is designed to prevent volatility in money supply growth that could undermine recent progress in price stability.”
The CPPE noted that the policy easing comes at a time when the Nigerian economy has recorded five consecutive months of declining inflation, signaling that previous tightening measures are yielding results.
”Having restored a measure of macroeconomic stability and slowed inflationary pressures, the MPC’s pivot toward growth is both logical and timely,” CPPE added.
Since the last MPC meeting, global monetary easing has gained momentum, largely reflecting rising downside risks to growth and employment activities, while trade tensions have remained relatively subdued.
On the domestic front, inflation has continued to moderate, and the naira has remained relatively stable.
The CPPE equally highlighted the implication of the move on the economy, saying that the combination of lower MPR and reduced CRR should expand banks’ capacity to create credit, lowering lending rates and making financing more accessible for businesses, especially SMEs.
It notes that lower cost of funds will encourage new investments, support business expansion, and enhance capacity utilization in the real sector. This will ultimately stimulate output growth and job creation.
For CPPE, a 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.
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