The Centre for the Promotion of Private Enterprise (CPPE) has urged the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) to halt further interest rate hikes.
Dr Muda Yusuf, Chief Executive Officer of CPPE, made the call in an interview with the News Agency of Nigeria (NAN) on Monday in Lagos.
He said that a halt in interest rate hikes would help to allow fiscal policy measures to address inflation.
BRANDECONOMY reports that the Central Bank of Nigeria (CBN’s) 299th MPC meeting is scheduled to hold on Wednesday, Feb. 19 and Thursday, Feb. 20, 2025.
BRANDECONOMY further reports that Nigeria’s current interest rate is 27.5 per cent while inflation rate stands at 34.6 per cent.
Yusuf stated that further interest rate increases would negatively impact manufacturing and the real sector.
“My expectation from the monetary policy committee meeting is to maintain a hold but my preference, is actually to begin to relax some of the tightening measures because of the outrageous level of interest rate.
“However, I am not expecting that there should be a further hike either in MPR or the CRR.
“I believe that we have reached the point where we need to pause on these hikes and allow the fiscal policy measures to take over, in terms of coming up with measures to tackle inflation,” he said.
He emphasised that a significant portion of inflation stemmed from supply-side issues, particularly the costs of energy, production, and imports.
Yusuf explained that fiscal authorities had a great role to play, in moderating these costs because the prevailing interest rate was impeding investment, job creation and discouraging entrepreneurship.
“My expectation is that in worst case scenario, there should be a pause in the rate.
“However, my preference is that we should begin to relax some of those tightening measures, so that the real economy can have some breathing space.
“We also need to elevate or increase the fiscal policy level interventions, especially around cost of energy, cost of import and of course cost of transportation which are also related in a way to the cost of energy,” he said.
He expressed optimism of positive global outlook for the energy sector because of policies of US President, Donald Trump.
According to him, the outlook for energy cost is looking better for businesses, although it may affect revenue negatively.
He noted a potentially positive global outlook for energy costs, partially due to policies of the U.S. President.
This, Yusuf added, could lead to decreases in the prices of crude oil, PMS, diesel, and gas, especially with efforts towards peace in Ukraine and Russia.
He also emphasised the need for the Nigerian government to provide incentives for the real economy to lower costs.
“We should also manage our fiscal operations well, so that we don’t overheat the economy from the fiscal side.
“What I mean by that is reducing; ensuring that we keep our physical deposit as low as we can,” he said.
