The Centre for the Promotion of Private Enterprise (CPPE) has urged the Central Bank of Nigeria (CBN) to pause its interest rate hikes at the upcoming monetary policy committee (MPC) meeting.
The MPC meeting, scheduled for July 22 and 23, is the CBN’s highest policy-making body, chaired by Governor Olayemi Cardoso. The committee reviews the country’s economic and financial conditions to determine the appropriate monetary policy direction for the short to medium term.
Muda Yusuf, CEO of CPPE, expressed concerns in an interview with NAN that the current monetary policy tools have been overused in efforts to control inflation.
While acknowledging the CBN’s dedication to curbing inflation, Yusuf suggested that the MPC might opt for a minimal rate increase due to the bank’s stabilization efforts.
“Given the Central Bank of Nigeria’s consistent commitment to addressing inflation, there’s a strong likelihood that the MPC may decide on a marginal interest rate hike,” Yusuf stated. “However, I hope the central bank will hold off on further rate increases for now, as monetary policy instruments have been significantly overextended in the fight against inflation.”
At the last meeting on May 20 and 21, the MPC raised the monetary policy rate (MPR) from 24.75 percent to 26.25 percent. The committee maintained the asymmetric corridor at +100 basis points and -300 basis points around the MPR and kept the cash reserve ratio (CRR) at 45 percent for deposit money banks and 14 percent for merchant banks.
Governor Cardoso explained that the interest rate hike was necessary to control inflation.
