Economic experts, financial analysts and operators in Nigeria’s small and medium-scale enterprise (SME) sector have welcomed the Central Bank of Nigeria’s (CBN) decision to retain the Monetary Policy Rate (MPR) at 26.5 per cent, describing the move as a prudent balance between fighting inflation and supporting economic growth.
The decision was announced at the conclusion of the 305th meeting of the Monetary Policy Committee (MPC), where members unanimously voted to leave all key monetary policy parameters unchanged amid persistent inflationary pressures and heightened global economic uncertainty.
For many stakeholders, the decision signals a shift from aggressive monetary tightening to a more cautious, data-driven approach aimed at preserving macroeconomic stability without imposing additional burdens on businesses already grappling with high financing costs, elevated energy prices, exchange rate volatility and weak consumer purchasing power.
Analysts noted that after a prolonged cycle of interest rate hikes designed to tame inflation and stabilise the foreign exchange market, maintaining the benchmark rate offers businesses and investors a degree of certainty and breathing space.
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Economic analyst Dr. Albert Miyaki said the decision reflects the need for policy stability at a time when many sectors of the economy remain under pressure.
“Keeping the rate unchanged sends a message of caution and stability. Businesses and investors have faced significant challenges arising from aggressive tightening over the past year. Holding the rate provides some breathing room for economic actors,” he said.
Miyaki, however, stressed that financing conditions remain difficult for businesses, particularly those in productive sectors.
“Interest rates are still extremely high for businesses. While inflation control remains important, there is also a need to support productivity, investment and job creation,” he added.
The position was echoed by the Centre for the Promotion of Private Enterprise (CPPE), which described the MPC’s decision as evidence of a more sophisticated understanding of the underlying drivers of inflation in Nigeria.
Chief Executive Officer of the CPPE, Dr. Muda Yusuf, said the organisation welcomed the decision to retain all key monetary policy parameters.
According to him, the move 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 maintaining relative stability in the foreign exchange market and for adopting a disciplined approach to monetary management despite external economic shocks and geopolitical uncertainties.
For operators in the SME sector, the decision to avoid another rate hike was particularly significant.
Many small business owners have repeatedly complained about the rising cost of credit, with commercial lending rates in some cases exceeding 30 per cent, making access to financing increasingly difficult.
Abuja-based entrepreneur Mrs. Chioma Nwosu said high borrowing costs have forced many businesses to scale down operations, delay expansion plans and reduce investments.
“Most SMEs cannot survive with lending rates above 30 per cent. Many businesses are already downsizing because they cannot finance inventory, equipment or expansion. At least the decision not to raise rates again offers some relief,” she said.
Investment banker Tunde Adeyemi also welcomed the MPC’s decision, arguing that policy consistency could improve investor confidence and strengthen participation in financial markets.
“The private sector has been concerned about continuous tightening. Retaining the benchmark rate provides predictability and may encourage investors who have remained on the sidelines due to uncertainty,” he said.
Despite supporting the MPC’s decision, analysts warned that the current interest rate environment remains restrictive, particularly for sectors such as manufacturing, agriculture and small-scale enterprises that rely heavily on affordable credit to drive growth and employment.
Stakeholders noted that while the pause in tightening may help stabilise market sentiment and reinforce confidence in Nigeria’s monetary policy framework, it does not eliminate the broader structural challenges facing the economy.
Business groups argued that inflation in Nigeria is driven largely by supply-side factors, including insecurity, inadequate infrastructure, logistics bottlenecks, energy costs and disruptions within agricultural value chains.
According to them, monetary policy alone cannot address these challenges, and further rate hikes would likely do little to curb inflation while potentially suppressing investment and consumer spending.
Several economists therefore called for stronger coordination between monetary and fiscal authorities to tackle the root causes of inflation and improve productivity across key sectors of the economy.
They urged government agencies to accelerate reforms aimed at reducing the cost of doing business, improving infrastructure, enhancing energy supply and addressing security concerns that continue to affect production and distribution networks nationwide.
Many stakeholders also expressed optimism that if inflation continues to moderate in the coming months, the CBN could begin a gradual easing cycle to support economic expansion and private sector growth.
The consensus among economists and business operators is that while the decision to maintain rates is appropriate under current conditions, a carefully managed reduction in borrowing costs may eventually be required to stimulate investment, expand production and create jobs.
The MPC retained the Monetary Policy Rate at 26.5 per cent after reducing it by 50 basis points from 27 per cent at its previous meeting. Other policy parameters were also left unchanged, including the Cash Reserve Ratio, which remains at 45 per cent for commercial banks and 16 per cent for merchant banks, while the Liquidity Ratio was retained at 30 per cent.
The committee’s decision came against the backdrop of rising inflation, with Nigeria’s headline inflation rate increasing to 15.69 per cent in April 2026 from 15.38 per cent in March, marking the second consecutive monthly increase.
Financial market analysts had broadly anticipated that the MPC would maintain the status quo, citing persistent inflationary pressures, exchange rate concerns and uncertainties in the global economy.
With inflation still elevated and external risks continuing to shape economic conditions, the CBN appears committed to a cautious policy path—one that seeks to safeguard price stability while laying the groundwork for sustainable growth and stronger investor confidence.
