WED SEPT 23 2026-theGBJournal| The Centre for the Promotion of Private Enterprise (CPPE) welcomes the recalibration of the monetary policy framework announced by the Monetary Policy Committee [MPC] at its meeting of 22 September 2026, particularly the reduction of the Monetary Policy Rate [MPR] by 350 basis points from 26.5% to 23%.
The magnitude of the adjustment was largely unexpected and represents a significant shift from the prolonged restrictive monetary policy regime. It signals an important rebalancing of monetary policy towards supporting growth, investment and economic recovery, while preserving price and financial-system stability.
The review of the asymmetric corridor around the MPR from +50/-450 basis points to +50/-300 basis points further reinforces the recalibration of the monetary policy architecture.
A Timely Reset
The CPPE considers the adjustment timely given the improving inflation trajectory and the growing costs of an excessively restrictive monetary environment.
There had also been a widening misalignment between the MPR of 26.5%, inflation of about 15.4%, and prevailing money-market rates of around 20%. This weakened the signalling function of the policy rate and raised concerns about the effectiveness of monetary policy transmission.
The reduction of the MPR to 23% should therefore be viewed not merely as monetary easing, but as an important realignment of the policy rate with prevailing macroeconomic and financial-market conditions.
It is significant in this context that the CBN characterised the decision as a recalibration or reset of the monetary policy framework.
Major Relief for the Real Sector
The decision is particularly positive for the real sector, where high financing costs have become a major constraint on investment, production, working capital and job creation.
For many businesses, commercial lending rates have remained at levels that are difficult to reconcile with productive investment, particularly in manufacturing, agriculture, construction, logistics and other sectors with relatively long investment cycles and tight margins.
The policy adjustment therefore offers an opportunity to reduce the cost of capital, improve business cash flows, stimulate investment and strengthen the productive capacity of the economy.
However, the ultimate economic value of the decision will depend on transmission.
The CPPE expects banks to reflect the new monetary policy environment in the pricing of credit. Lending rates on both new and existing facilities should progressively adjust downwards. Without meaningful transmission to borrowers, the impact of the policy adjustment on investment and economic growth would be limited.
Positive Fiscal Implications
The decision also has potentially significant implications for public finance.
The high interest-rate environment has contributed materially to the escalation of the Federal Government’s domestic debt-service burden.
Government securities have had to compete with exceptionally high market yields, increasing the cost of borrowing and placing additional pressure on already constrained fiscal space.
A sustained moderation in interest rates should reduce the marginal cost of government borrowing and, over time, moderate domestic debt-service costs.
This could create additional fiscal space for infrastructure, security, education, healthcare and other development priorities.
The fiscal dividend would, however, depend on the extent to which the MPR adjustment translates into lower yields across the government securities market.
Exchange-Rate and Portfolio-Flow Risks Must Be Managed
The CPPE acknowledges that an adjustment of this magnitude is not without risks.
The divergence between Nigeria’s monetary policy direction and recent tightening by some major central banks around the world could affect interest-rate differentials and the relative attractiveness of naira-denominated financial assets.
This creates a potential risk of portfolio-flow reversals and renewed pressure on the foreign-exchange market.
However, Nigeria is approaching this policy transition from a considerably stronger external position than in previous episodes of monetary easing. The improvement in foreign reserves, greater stability in the foreign-exchange market and stronger external-sector buffers provide the CBN with greater policy headroom.
The CBN should nevertheless remain vigilant and deploy its monetary policy instruments, including open-market operations, as and when necessary to mitigate excessive volatility and preserve exchange-rate stability.
Monetary Easing Must Be Reinforced by Supply-Side Reforms
The CPPE stresses that lower interest rates alone cannot deliver sustainable economic recovery.
A significant proportion of Nigeria’s inflationary pressures remains structural and supply-driven. Energy costs, logistics bottlenecks, insecurity, food-production constraints, infrastructure deficits and high regulatory costs continue to exert considerable pressure on prices and business operating costs.
The current monetary recalibration should therefore be complemented by stronger fiscal and structural interventions aimed at reducing production costs, improving productivity, strengthening food and energy security, and expanding domestic productive capacity.
This is critical to ensuring that monetary easing translates into investment and additional output rather than renewed inflationary pressure.
Conclusion
The CPPE considers the September MPC decision a significant and positive turning point in the monetary policy cycle.
The 350-basis-point adjustment should help reduce financing pressures on businesses, strengthen investment prospects, support economic growth and progressively moderate the government’s domestic debt-service burden.
But the success of the policy should ultimately be judged by four outcomes: the extent of reduction in commercial lending rates; the response of private investment and credit to the productive sectors; the behaviour of inflation; and the stability of the foreign-exchange market.
The priority should therefore be to ensure effective monetary policy transmission while carefully managing liquidity, portfolio-flow and exchange-rate risks.
DR MUDA YUSUF is the Chief Executive Officer, Centre for the Promotion of Private Enterprise [CPPE]
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