CBN retains lending rate at 26.6%, CRR at 45% for DMBs

CPPE backs Apex Bank’s decision, says action pragmatic, reflective of prevailing inflationary realities confronting Nigerian economy

Nigeria’s current macroeconomic environment sufficient for disinflation – Cardoso

The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN), at its 305th meeting on Wednesday voted on policy parameters as follows to retain the Monetary Policy Rate (MPR) at 26.5 per cent.

This marks a shift from the committee’s aggressive tightening stance informed by its inflation-targeting posture.

The CBN Governor, Yemi Cardoso, presented the communique from the meeting.

Cardoso announced that the MPC also retained the Cash Reserve Ratio (CRR) at 45 per cent for commercial banks, 16 per cent for merchant banks, and 75 per cent for non-TSA public sector deposits.

He said that the Standing Facilities Corridor was also retained at +50 / -450 basis points around the MPR.

Meanwhile, the Centre for the Promotion of Private Enterprise (CPPE) has praised the Central Bank of Nigeria (CBN) for retaining key monetary policy parameters at the 305th MPC meeting.

Dr Muda Yusuf, CPPE Chief Executive Officer, in a statement on Wednesday, described the decision as pragmatic and reflective of prevailing inflationary realities confronting the Nigerian economy.

The Monetary Policy Committee (MPC) retained the Monetary Policy Rate (MPR) at 26.5 per cent during its latest policy meeting held in Abuja.

The committee also retained the Cash Reserve Ratio at 15 per cent for merchant banks and 45 per cent for deposit money banks.

It further retained the Cash Reserve Ratio (CRR) for non-Treasury Single Account deposits at 75 per cent, maintaining existing monetary tightening measures.

Yusuf said the MPC decision demonstrated policy maturity and strategic restraint amid growing global uncertainty and rising geopolitical tensions affecting international markets.

According to him, Nigeria’s inflationary pressures remain largely structural and externally induced rather than purely monetary in nature.

He noted that supply-side disruptions and volatility in global oil prices, linked to tensions involving the United States, Israel and Iran, worsened inflationary pressures.

 “Attempting to force down structural inflation solely through aggressive monetary tightening would amount to applying a monetary solution to a structural problem,” Yusuf said.

He warned that further tightening measures could suppress productivity and weaken the country’s industrial recovery efforts at a critical economic period.

Yusuf added that excessive tightening could discourage private investment, reduce business confidence and undermine sustainable job creation across productive sectors.

The CPPE boss also commended the CBN for strengthening discipline in monetary management and sustaining relative stability within the foreign exchange market.

According to him, exchange rate stability has emerged as a major anchor for macroeconomic confidence and improved investor sentiment in the economy.

He explained that the stable exchange rate environment had helped moderate imported inflation and improve planning by businesses and investors.

Yusuf further said exchange rate stability had reduced market distortions and contributed to better predictability in commercial and industrial operations nationwide.

He stated that the apex bank’s recent policy direction signalled a transition from crisis management to confidence management in economic governance.

According to him, restoring investor confidence remains essential for attracting long-term capital and stimulating broader economic growth and industrial expansion.

Yusuf also praised the Federal Government for renewed commitment toward fiscal consolidation and improved revenue generation performance.

He applauded the smooth implementation of the banking sector recapitalisation programme introduced by the CBN to strengthen financial institutions.

According to him, the exercise had not triggered depositor panic, bank failures or any significant erosion of shareholder confidence within the banking sector.

Yusuf said the recapitalisation programme would enhance the banking sector’s capacity to finance industrialisation, infrastructure development and long-term economic transformation.

He, however, urged the CBN to sustain clear communication with banks still addressing recapitalisation-related concerns and compliance requirements.

According to him, consistent engagement with stakeholders would help preserve depositor confidence and maintain stability across the nation’s financial system.

Yusuf said the outcome of the 305th MPC meeting reflected a balanced policy approach designed to support investment, competitiveness and sustainable employment generation.

He added that the policy stance would also encourage productivity growth, industrialisation and broader economic resilience amid challenging global economic conditions.

Meanwhile, the Governor of the Central Bank of Nigeria (CBN), Mr Olayemi Cardoso, says Nigeria’s macroeconomic fundamentals remain resilient enough to support a gradual return to lower inflation.

Cardoso stated this on Wednesday in Abuja while presenting the communiqué from the 305th meeting of the Monetary Policy Committee (MPC).

Cardoso said that the decisions of the MPC were anchored on a comprehensive assessment of risks to the outlook.

According to him, although inflation has risen marginally for two consecutive months, largely induced by external shocks, the MPC recognised its transitory nature.

He said that the committee remained confident that the current macroeconomic environment was sufficiently robust to support a return to disinflation.

“In reaching its decisions, the MPC particularly noted the spillovers from the Middle East crisis, which have exerted upward pressure on energy prices, cost of transportation and other logistics.

“However, available evidence indicates that the impact of the crisis on the Nigerian economy has been largely muted due to the benefits of prior policy reforms.

“These include exchange rate stability, improvements in external reserve buffers, strengthened monetary policy transmission, well-capitalised banking system and ongoing fiscal consolidation.

The CBN governor said that the reforms had significantly improved the economy’s ability to absorb external shocks.

“As a result, the pass-through of global commodity and energy price shocks to domestic inflation has been significantly mitigated and would have been more pronounced in the absence of these reforms.

“The MPC was, therefore, convinced that the essential conditions for price stability remain firmly in place,” Cardoso said.