The Centre for the Promotion of Private Enterprise (CPPE) has cautioned the Central Bank of Nigeria (CBN) against further increases in interest rates, warning that additional monetary tightening could weaken economic recovery and worsen pressure on businesses and households.
The economic policy advocacy group issued the warning ahead of the CBN’s 305th Monetary Policy Committee (MPC) meeting, where policymakers are expected to review inflation trends, exchange rate stability, and broader macroeconomic conditions.
In a statement released on Sunday, CPPE Chief Executive Officer, Muda Yusuf, said Nigeria’s economic environment remains too fragile to absorb further tightening measures.
According to the organisation, expectations ahead of the MPC meeting should be viewed within the context of rising geopolitical risks, fiscal pressures, and persistent structural weaknesses in the economy.
“Expectations ahead of the forthcoming 305th meeting of the Monetary Policy Committee should be situated within the context of evolving domestic macroeconomic realities, heightened geopolitical uncertainties and emerging fiscal liquidity risks confronting the Nigerian economy,” the statement said.
Yusuf warned that additional tightening could hurt credit expansion, reduce investment appetite, and undermine the fragile recovery in the real sector.
“The Nigerian economy remains fragile and structurally constrained. Further tightening of monetary conditions could significantly weaken credit expansion, dampen investment appetite and undermine the fragile recovery momentum within the real sector,” he stated.
He added that persistently high interest rates could increase loan defaults, weaken business sustainability, and worsen government debt servicing pressures.
The CPPE argued that aggressive monetary tightening could negatively affect industrial productivity, private sector investment, employment generation, and overall economic growth.
According to the group, Nigeria’s inflationary pressures are largely structural and supply-driven rather than demand-induced, making conventional monetary tightening less effective in addressing rising prices.
The organisation identified high energy costs, transportation expenses, logistics bottlenecks, weak infrastructure, and production inefficiencies as major drivers of inflation.
CPPE also noted that rising interest rates are already increasing financing costs for businesses and consumers.
The group maintained that a tighter monetary policy is more effective in addressing demand-pull inflation than supply-side inflation shocks and called for a more pragmatic and context-sensitive policy framework suited to developing economies like Nigeria.
It stressed that Nigeria’s economy requires policies that balance inflation control with economic growth, productivity expansion, and job creation.
Nigeria’s headline inflation rate rose to 15.69 per cent in April 2026 from 15.38 per cent recorded in March.
The CBN is expected to hold its 305th MPC meeting this week, with investors closely watching for signals on the direction of monetary policy.
At its last meeting, the apex bank reduced the Monetary Policy Rate (MPR) by 50 basis points to 26.5 per cent from 27 per cent.
