The Nigeria Employers’ Consultative Association (NECA) has commended the Central Bank of Nigeria (CBN) for reducing the Monetary Policy Rate (MPR), though it said the monetary policy stance remains tight.

NECA Director-General, Mr. Adewale-Smatt Oyerinde, praised the decision in a statement issued on Tuesday in Lagos.

He noted that the Monetary Policy Committee (MPC) lowered the MPR from 27.0% to 26.5% at its 304th meeting.

Oyerinde described the 50 basis points cut as “a cautious but noteworthy signal” that authorities were responding to sustained pressures on businesses.

He said the marginal reduction might not immediately lower lending rates, but reflected “a gradual shift toward supporting growth without undermining price stability”.

According to him, the overall stance remained tight, with the Cash Reserve Ratio retained at 45% and the liquidity ratio at 30%.

He added that the asymmetric corridor around the MPR was also maintained, reinforcing a cautious monetary approach.

“With a substantial portion of deposits still sterilised, banks’ capacity to expand credit to the real sector may remain constrained in the near term,” he said.

Oyerinde described the move as “a careful balancing act” aimed at moderating inflation without worsening pressures on businesses.

He noted that firms continued to grapple with high operating costs, exchange rate volatility and weakened consumer demand.

“Inflation, particularly in food, energy and transportation, remains a significant challenge to employers and households,” he said.

He stressed that the modest easing must be supported by coordinated fiscal and structural reforms to address supply-side constraints.

Such reforms, he said, should improve infrastructure and enhance productivity across key sectors of the economy.

Oyerinde urged financial institutions to ensure the MPR reduction was gradually reflected in lending conditions for manufacturers and SMEs.

 He affirmed that although the MPC had not fully relaxed its tightening stance, the rate cut signalled cautious optimism.

 “Sustained improvements in inflation, exchange rate stability and investor confidence will determine scope for further easing that supports growth and employment,” he said. (NAN)