The Centre for the Promotion of Private Enterprise said the Central Bank of Nigeria’s Monetary Policy Committee decision to cut the interest rate by 50 basis points to 27 per cent, down from 27.50 per cent, is a timely intervention for Nigerian businesses and the economy.
The Chief Executive Officer of CPPE, Muda Yusuf, disclosed this in a statement on Tuesday.
DAILY POST reports that CBN justified Tuesday’s first interest rate cut in three years on the fifth consecutive months of disinflation in the country.
Reacting, CPPE said having restored a measure of macroeconomic stability and slowed inflationary pressures, the MPC’s pivot towards growth is logical.
The economic think-tank organisation said the country’s high interest rates in recent quarters have significantly constrained private sector credit, increased the cost of funds, and weighed on business expansion.
CPPE noted that by lowering the MPR and CRR, the CBN is deliberately working to improve liquidity conditions, reduce borrowing costs, and unlock capital for productive sectors of the economy.
“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.
“Lower cost of funds will encourage new investments, support business expansion, and enhance capacity utilisation in the real sector. This will ultimately stimulate output growth and job creation.
“Strengthened financial intermediation and a more accommodative monetary environment will enable banks to fulfil their core function of mobilising savings and channeling them into productive investments, reinforcing financial deepening and economic growth,” CPPE stated.
