The Centre for the Promotion of Private Enterprise (CPPE) has projected that monetary conditions will remain tight in 2025. This outlook is influenced by several key factors, including the Central Bank of Nigeria’s (CBN) commitment to orthodox monetary policy and inflation targeting. The high Monetary Policy Rate (MPR) and Cash Reserve Ratio (CRR) are expected to continue, although the degree of tightening may decelerate.
High inflationary pressure has been a significant concern, with inflation peaking in the previous year. Key drivers of inflation, such as high energy costs, elevated exchange rates, and high transportation costs, are likely to persist. Additionally, factors like insecurity affecting agricultural output, climate change, and imported inflation due to geopolitical tensions and supply chain disruptions will continue to impact the economy.
The CPPE has highlighted the need for appropriate policy measures to address the disparities between the financial services sector and the real economy. The financial services sector has shown growth, while sectors with high job creation potential, such as agriculture and manufacturing, have struggled. This situation underscores the importance of policies that support real sector investment and economic inclusion.
The CPPE also emphasizes the importance of revitalizing development finance institutions to support sectors like agriculture and agro-allied industries. High interest rates in commercial banks have impeded the recovery and growth of these sectors. The CBN is urged to soften its tightening stance to support investment growth and job creation.
In conclusion, the CPPE’s projection of tight monetary conditions in 2025 reflects the ongoing challenges and complexities within the Nigerian economy. Addressing these issues will require a balanced approach that considers both monetary policy and the broader economic context.
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