CPPE to CBN: Halt interest rate hikes temoprarily… monetary policy instruments overstretched

The Centre for the Promotion of Private Enterprise (CPPE) has asked the Central Bank of Nigeria (CBN) to halt the interest rate hike at its next monetary policy committee (MPC) meeting.

The CBN’s MPC meeting is slated for July 22 and 23. The committee is the highest policy-making body of the regulator, led by Olayemi Cardoso, CBN’s governor.

The committee is set up to review the country’s economic and financial conditions and determine the appropriate monetary policy direction in the short to medium term.

Speaking with NAN on Sunday, Muda Yusuf, CPPE’s chief executive officer, expressed concerns that the monetary policy instruments have been overstretched in efforts to control inflation.

Yusuf also acknowledged CBN’s ongoing commitment to curbing inflation, suggesting that the MPC might consider a minimal increase, given the bank’s stabilisation efforts.

“Knowing the disposition of the Central Bank of Nigeria, given the fact that the bank has repeatedly affirmed its commitment to taming inflation, there is a very high probability that the MPC is likely to hike interest rates, although it may be marginal,” the CPPE boss said.

“My wish is that the central bank should put a hold on interest rate hikes for now. I believe that monetary policy instruments have been practically over-stretched in this quest to tame inflation.”

At the last meeting held on May 20 and 21, the committee raised the monetary policy rate (MPR), which benchmarks interest rates from 24.75 percent to 26.25 percent.

The MPC retained the asymmetric corridor at +100 basis points and -300 basis points around the MPR.

The committee also retained the cash reserve ratio (CRR) at 45 percent for deposit money banks and 14 percent for merchant banks.

Speaking to the press after the meeting, Cardoso had said the reason for the interest rate hike was to tame inflation.