Members of the Organised Private Sector (OPS) have called on the Central Bank of Nigeria to either maintain or reduce the current interest rate, opposing any further increases as the Monetary Policy Committee (MPC) meets today to review the Monetary Policy Rate (MPR).

The interest rate decision is expected at the committee’s 300th meeting, taking place from May 19 to 20. At its 299th meeting in February, the MPC held the MPR steady at 27.50 percent, which serves as a key benchmark for lending rates.

OPS representatives urged the MPC to lower the MPR—currently the fifth highest in the world—or at least maintain the current rate to avoid placing additional strain on the economy.

The Chairman of the Organised Private Sector of Nigeria, Dele Oye, advocated for a reduction of the MPR to prevent slowed business growth while criticising the existing rate, stating, “The economy cannot run on the 27.5 per cent interest rate. Nobody can borrow money at the current rate and make a profit from business.”

Oye, who also leads the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture, stressed that while increasing the benchmark interest rate may help control inflation, it usually raises costs and creates uncertainty for businesses, which adversely affects their operations and growth opportunities.

He explained: “A hike in the interest rate by CBN can have several potential consequences for businesses, including increased borrowing costs and higher interest rates, which means that loans and lines of credit become more expensive, increasing the cost of financing for businesses, thus increasing operational costs.

“As borrowing becomes more expensive, businesses may delay or scale back on investments for expansion, new projects, or capital improvements. This can slow down business growth and innovation and decrease consumer spending.”

The OPS chairman contended that rising interest rates drive up borrowing costs, cutting into consumers’ disposable income and causing a drop in consumer spending. He expressed concern over the adverse effects this has on the retail and service industries.

Similarly, the Association of Small Business Owners of Nigeria’s National President Dr Femi Egbesola urged the CBN to consider a downward review of the MPR, noting that “The current high interest rate environment is exerting significant pressure on businesses, especially Micro, Small, And Medium Enterprises which form the backbone of our economy.”

Egbesola acknowledged the CBN’s inflation-combating efforts, but urged the top lender to strike a balance to not choke productive business activities. He explained that an elevated MPR directly translates to higher borrowing costs, which discourages investment, stifles expansion, and undermines job creation.

“At a time when businesses are already grappling with rising energy costs, foreign exchange instability, and declining consumer purchasing power, raising the MPR further would worsen the situation,” he advised. “Therefore, we in the OPS strongly recommend that the CBN hold the rate steady or consider easing it to stimulate economic activities, drive industrial output, and encourage credit flow to the real sector.”

Nigeria’s efforts led to a 0.52 percent contraction, with the inflation rate marginally decreasing from 24.23 percent in March to 23.71 percent in April 2025. Food inflation also dropped significantly, falling to 21.36 percent—a 19.27 percent decline compared to April 2024’s rate of 40.53 percent. The National Bureau of Statistics attributed this decline in food inflation to the recent rebasing of the Consumer Price Index.

In contrast, the Centre for the Promotion of Private Enterprise predicted that the Monetary Policy Committee (MPC) would likely keep the interest rate steady at 27.5 percent, citing fiscal constraints and exchange rate considerations as reasons against either a reduction or an increase.

The Director of the CPPE, Dr Muda Yusuf, observed that “the current uncertainties in the global economy” would dissuade the MPC from easing the MPR while the country’s existing fiscal measures, including a very high cash reserve ratio, were extreme enough to discourage any further tightening of the MPR.

“I believe that we are almost at the limit of monetary policy tightening, with a cash reserve ratio at 50 per cent and a monetary policy rate at 27.5 per cent,” Yusuf explained, “These are some of the highest rates you can find anywhere in the world. And on top of that, we have a liquidity ratio at 30 per cent and a symmetric corridor at plus 500 basis points. For me, we don’t want to strangulate the entire financial system.”

The CPPE director urged the MPC to retain the rates as they are, should the committee decide not to ease them, stating that the changing global trade system is due to the new tariffs from the United States of America’s President Donald Trump.

“It is better to retain the rates as they are, if the MPC is not easing. I know the CBN is not likely to ease the monetary policy condition now, because of the current uncertainties in the global economy,” he remarked. “We don’t know how far the effect of this Trump tariff will go, and the implications for the crude oil price and our fiscal position. I expect that we are likely to see a hold on the rates at the next MPC meeting.”

The Director of the CPPE, Dr Muda Yusuf, observed that “the current uncertainties in the global economy” would dissuade the MPC from easing the MPR while the country’s existing fiscal measures, including a very high cash reserve ratio, were extreme enough to discourage any further tightening of the MPR.

“I believe that we are almost at the limit of monetary policy tightening, with a cash reserve ratio at 50 per cent and a monetary policy rate at 27.5 per cent,” Yusuf explained, “These are some of the highest rates you can find anywhere in the world. And on top of that, we have a liquidity ratio at 30 per cent and a symmetric corridor at plus 500 basis points. For me, we don’t want to strangulate the entire financial system.”

The CPPE director urged the MPC to retain the rates as they are, should the committee decide not to ease them, stating that the changing global trade system is due to the new tariffs from the United States of America’s President Donald Trump.

“It is better to retain the rates as they are, if the MPC is not easing. I know the CBN is not likely to ease the monetary policy condition now, because of the current uncertainties in the global economy,” he remarked. “We don’t know how far the effect of this Trump tariff will go, and the implications for the crude oil price and our fiscal position. I expect that we are likely to see a hold on the rates at the next MPC meeting.”

Private sector groups have insisted against any further increase in the interest rates, arguing that it decimates the productive sector, especially manufacturers, who find it increasingly difficult to make a profit on their loans.

The PUNCH earlier reported that the Lagos Chamber of Commerce and Industry President, Gabriel Idahosa, criticised the 27.5 per cent MPR, arguing that it should not have been double-digit in the first place.

According to Idahosa, the MPR is ineffective in reducing inflation because Nigeria’s economy is highly import-dependent. He called on the CBN to focus on attracting investments rather than relying solely on MPR adjustments.