Business leaders and economists have projected that the Central Bank of Nigeria (CBN) will retain the Monetary Policy Rate (MPR) at 26.5 per cent when the Monetary Policy Committee (MPC) begins its two-day meeting on Monday.
The experts said persistent global uncertainties, particularly heightened geopolitical tensions in the Middle East, make it unlikely that the apex bank will cut interest rates despite growing calls from businesses for lower borrowing costs.
Their projections come even as the CBN’s latest Inflation Expectations Survey showed that 61.1 per cent of Nigerians want interest rates reduced.
Chief Executive Officer of the Centre for the Promotion of Private Enterprise, Dr. Muda Yusuf, said the ongoing conflict involving the United States and Iran could worsen inflation through higher energy prices, making monetary easing premature.
“What I expect is a hold because it is possibly too soon to relax the MPR because of the current geopolitical issues. We have seen a very dramatic escalation, and this has implications for major macroeconomic indicators, particularly the general price level.”
Yusuf noted that rising crude oil prices above $84 per barrel could fuel inflationary pressures, reducing the likelihood of an interest rate cut.
“Although I don’t mind a rate cut because interest rates are too high, given the prevailing global conditions, especially the Middle East conflict, people hoping for a rate cut should exercise more patience.”
President of the Lagos Chamber of Commerce and Industry, Leye Kupoluyi, said businesses would benefit significantly from lower interest rates, describing borrowing costs as a major contributor to the high cost of doing business.
“Everyone wants a reduced interest rate. Interest rate is a major part of the cost of doing business because everybody needs funds for their business.”
He added that cheaper credit would enable businesses to expand and reduce costs passed on to consumers.
However, Kupoluyi urged caution ahead of the committee’s decision.
“Let’s see what they come up with. But definitely, for interest rates to come down, it is for the benefit of industry, businesses, and ultimately the customer.”
Professor of Economics and Public Policy at the University of Uyo, Prof. Akpan Ekpo, also predicted that the MPC would likely maintain the benchmark rate because of uncertainty surrounding the Middle East conflict.
“Many people would like a reduced interest rate because the MPR is the anchor rate for bank lending. But my worries are the US-Iran war. We don’t know when it is going to end.”
Ekpo warned that a prolonged conflict could trigger another rise in inflation, forcing the CBN to tighten monetary policy further if necessary.
He also urged the government to prioritise support for the manufacturing sector to stimulate production and create jobs.
Chief Executive Officer of Economic Associates, Dr. Ayo Teriba, said although businesses and households favour lower interest rates, the MPC would ultimately base its decision on broader economic data.
“Every reasonable person wants to see lower interest rates. We have seen stable exchange rates, and inflation has hovered around 15 per cent for six months.”
Teriba said he expected the committee to explain whatever decision it reached after assessing information not publicly available.
Manufacturers and other private sector operators have consistently argued that high borrowing costs continue to limit investment, expansion and job creation, particularly in industries that rely on affordable long-term financing.
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