The Centre for the Promotion of Private Enterprise (CPPE) says the manufacturing and agricultural sectors need fiscal support not further monetary tightening.
In a statement on Tuesday, the CPPE criticised the monetary policy committee (MPC) of the Central Bank of Nigeria (CBN) for maintaining its tightening stance despite evidence of declining growth in critical sectors of the economy.
“It is troubling that despite the declining growth performance of many critical sectors of the economy as evidenced in the third quarter GDP report, the MPC still continued its tightening stance,” the statement reads.
“The GDP sectoral performance report also revealed a glaring disconnect between the financial services sector and the real economy.
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“The financial services sector recorded a growth of 32%, while agriculture and manufacturing grew by 1.14% and 0.92%. This hawkish disposition would deepen this distortions.
“Meanwhile strategic economic sectors such as agriculture and manufacturing and real estate recorded declines in growth in the third quarter. Air transport and textile remained in recession.
“These sectors need monetary and fiscal support not a further tightening of monetary conditions.”
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The organisation urged the apex bank to scale up its support for development finance institutions to mitigate the financing challenges caused by the sustained tight monetary policy regime.
On Tuesday, the MPC raised the monetary policy rate (MPR), which benchmarks interest rates in the country to 27.5 percent — from 27.25 percent.
Announcing the MPC’s decision at a press conference in Abuja, Olayemi Cardoso, CBN’s governor, said the MPR was increased by 25 basis points.
He said the committee retained the asymmetric corridor at +500 and -100 basis points around the MPR.
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The CBN governor said the MPC also retained the cash reserve ratio (CRR) at 50 percent as well as the liquidity rate at 30 percent.
Cardoso said the MPR was raised to address price developments.
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