The Nigeria Employers’ Consultative Association (NECA) stated the modest easing in the monetary policy rate can only make a meaningful impact if complemented by coordinated fiscal and structural reforms that address supply-side constraints, improve infrastructure and enhance productivity.

Reacting to the decision the reduction of the monetary policy rate (MPR) from 27 per cent to 26.5 per cent at its 304th meeting of the Monetary Policy Rate (MPR) on Monday, the association urged financial institutions to ensure that the slight reduction in the MPR is gradually reflected in lending conditions for manufacturers, small and medium-scale enterprises (SMEs) and other productive enterprises.

Director-General of NECA, Adewale-Smatt Oyerinde, who commended the policy shift, emphasised that the marginal reduction in the benchmark interest rate represented a cautious but noteworthy signal that monetary authorities are beginning to respond to the sustained pressures facing businesses and the productive sector.

According to him, while the 50-basis point reduction may not immediately translate into significantly lower lending rates, it reflects a gradual shift toward supporting economic growth without undermining price stability.

The NECA boss reiterated that the overall policy stance remains tight, given the retention of the cash reserve ratio (CRR) at 45 per cent for commercial banks, alongside the maintenance of the liquidity ratio at 30 per cent and the asymmetric corridor around the MPR.
He noted that with a substantial portion of bank deposits still sterilised, the capacity of financial institutions to expand credit to the real sector may remain constrained in the near term.

Oyerinde noted that the decision reflected a careful balancing act aimed at moderating inflation while avoiding excessive strain on businesses already grappling with high operating costs and weakened consumer demand.

He stressed that inflation, particularly food, energy and transportation, continues to pose significant challenges to employers and households alike.

He affirmed that while the MPC has not fully relaxed its tightening stance, the reduction in the MPR signalled cautious optimism.