Economic experts, financial analysts, and small business operators have welcomed the decision of the Central Bank of Nigeria (CBN) to retain the Monetary Policy Rate (MPR) at 26.5%, describing the move as a cautious but necessary step toward preserving macroeconomic stability amid persistent inflationary pressures.

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The decision was announced after the 305th meeting of the Monetary Policy Committee (MPC), where the apex bank maintained all key monetary policy parameters at existing levels.

Stakeholders say the move reflects an attempt by the CBN to balance inflation control with the need to avoid further pressure on businesses already struggling with high borrowing costs, exchange rate volatility, rising energy prices, and weak consumer demand.

What they are saying

Economic analysts who spoke to Nairametrics say the decision to hold rates steady signals a more measured monetary policy stance by the CBN, particularly after an extended tightening cycle aimed at stabilising prices and the foreign exchange market.

Many stakeholders argued that retaining the benchmark rate provides some relief for businesses and investors who have faced elevated financing costs over the past year.

  • “Keeping the rate unchanged sends a message of caution and stability. Businesses and investors have been under significant pressure due to aggressive tightening over the past year. Holding the rate gives the economy some breathing space,” economic analyst Dr. Albert Miyaki said.
  • “Interest rates are still extremely high for businesses. While inflation control is important, there is also a need to support economic productivity and job creation,” Miyaki added.
  • Chief Executive Officer of the Centre for the Promotion of Private Enterprise (CPPE), Dr. Muda Yusuf, said the organisation “welcomes the decision of the Central Bank of Nigeria to maintain all key monetary policy parameters at the 305th meeting of the Monetary Policy Committee.” 
  • Yusuf further stated that the decision reflects “a pragmatic, measured and increasingly sophisticated understanding of the inflation dynamics currently confronting the Nigerian economy.” 

The CPPE also commended the apex bank for what it described as disciplined management of monetary policy and the relative stability recorded in the foreign exchange market in recent months.

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Operators within Nigeria’s small and medium-scale enterprise sector said the decision to avoid another rate hike would help reduce additional pressure on already strained businesses.

Many SMEs have complained about the high cost of borrowing, with lending rates from commercial banks remaining above 30% in several cases.

  • Abuja-based entrepreneur Mrs. Chioma Nwosu said many businesses are struggling to access affordable credit needed for expansion and operational sustainability.
  • “Most SMEs cannot survive with lending rates above 30%. Many businesses are already downsizing because they cannot finance inventory, equipment, or expansion. At least the decision not to raise rates again gives some relief,” she stated.
  • Investment banker Tunde Adeyemi noted that the MPC’s decision could improve investor confidence and support capital market activities by providing policy predictability.
  • According to him, “The private sector has been worried about continuous tightening. Retaining the rate provides predictability and may encourage investors who have been sitting on the sidelines.” 

Analysts, however, maintained that the current interest rate environment remains restrictive for productive sectors such as manufacturing, agriculture, and small-scale enterprises that depend heavily on access to affordable credit.

Stakeholders say the decision to maintain rates may help stabilise investor sentiment and preserve confidence in Nigeria’s monetary policy framework at a time when inflation, exchange rate pressures, and geopolitical risks continue to create uncertainty for emerging economies.

However, some experts argued that monetary tightening alone may not be sufficient to address Nigeria’s largely supply-driven inflation challenges.

  • Business groups warned that high financing costs continue to weaken production capacity and discourage investment expansion.
  • SMEs also noted that structural challenges such as insecurity, poor infrastructure, logistics bottlenecks, and high energy costs remain key drivers of inflation.
  • Analysts stressed that additional tightening could further weaken consumer spending and slow economic recovery.
  • Some economists therefore, called for complementary fiscal and structural reforms aimed at improving productivity and reducing the cost of doing business.

The consensus among many stakeholders is that while the current pause in tightening is positive, a gradual reduction in interest rates may eventually be necessary if inflation continues to moderate.

What you should know

The CBN retained the MPR at 26.5% after reducing the benchmark rate by 50 basis points from 27% at the previous MPC meeting held in February 2026.

The committee also retained other key policy parameters, including the Cash Reserve Ratio at 45% for commercial banks and 16% for merchant banks, while the Liquidity Ratio remained unchanged at 30%.