The Centre for the Promotion of Private Enterprise (CPPE) has praised the Central Bank of Nigeria (CBN) for cutting the Monetary Policy Rate by 50 basis points to 26.5 per cent.
According to CPPE, in a policy brief issued on Tuesday in Lagos, the move is growth-supportive.
It said the decision of the Monetary Policy Committee, announced by the CBN Governor, Olayemi Cardoso, reflected improving macroeconomic fundamentals and a cautious shift from aggressive tightening.
The organisation noted that sustained disinflation, stronger external reserves, an improved trade balance and relative exchange-rate stability had created room for monetary easing.
It said the rate cut could boost investor confidence and support private-sector growth, but cautioned that weak monetary transmission might limit its impact on lending rates.
The CPPE identified high cash reserve requirements, elevated lending rates, government borrowing and structural banking costs as major constraints to effective transmission.
The group also stressed the need for fiscal consolidation, citing high public debt, persistent deficits and rising debt-service obligations as risks to macroeconomic stability.
The Chief Executive Officer of CPPE, Dr Muda Yusuf, said effective policy coordination and stronger transmission mechanisms were critical to unlocking investment and sustaining growth.
He commended the CBN for what he described as a measured and data-driven policy adjustment.
The CPPE bods noted that the easing reflected strengthening macroeconomic performance, declining inflation, growing reserves, improved trade balance and enhanced foreign exchange stability.
Yusuf added that for the benefits of monetary easing to be fully realised, authorities must strengthen transmission to ensure lower lending rates for the real sector and advance credible fiscal consolidation to safeguard stability.
He said that if supported by structural reforms and disciplined fiscal management, the current policy direction could unlock a stronger investment cycle and more durable economic growth. (NAN)
