CBN says rate cut designed to stimulate productive activities

The Central Bank of Nigeria (CBN) announced a reduction in the Monetary Policy Rate from 26.5 percent to 23 percent, aiming to stimulate productive activities while maintaining efforts to reduce inflation to single digits. The CBN's Director of Stakeholder Engagement and Institutional Relations, Mrs. Hakama Sidi-Ali, disclosed this at the CBN Special Day during the 21st Abuja International Trade Fair.

The 350-basis-point decrease signaled a shift towards monetary easing after a prolonged period of tight policy to control inflation and stabilize the foreign exchange market. Sidi-Ali emphasized that the CBN, in collaboration with fiscal authorities, had undertaken reforms to bolster macroeconomic stability, restore investor confidence, and foster sustainable growth.

She highlighted that a moderated inflation, stable exchange rates, and a robust financial system would enable businesses to plan, invest, and expand more confidently. Sidi-Ali also urged financial institutions to increase financing to productive sectors, while businesses should focus on innovation, governance improvement, and exploring new markets.

The CBN noted that Nigeria's gross external reserves had increased to over $55 billion, the highest level in 18 years, attributed to higher foreign exchange inflows from remittances, investments, and increased participation in the formal financial system. The bank identified the Payments System Vision 2028 and the banking sector recapitalization exercise as additional reforms to strengthen the financial system.

The Abuja Chamber of Commerce and Industry's President, Emeka Obegolu, urged the CBN to deepen access to affordable financing for Micro, Small, and Medium Enterprises (MSMEs) and called for increased support for agriculture, manufacturing, trade, technology, and export-oriented businesses.