CPPE Criticizes CBN’s Interest Rate Hike Amid Economic Struggles
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The Centre for the Promotion of Private Enterprise (CPPE) has condemned the Central Bank of Nigeria (CBN) for its recent decision to increase interest rates for the fifth time, now set at 27.25%.
This decision, announced during the CBN’s Monetary Policy Committee (MPC) meeting, has sparked concerns among economic stakeholders.
Muda Yusuf, Executive Director of CPPE, expressed that the continued tightening of monetary policy contrasts sharply with the needs of investors and manufacturers, who are struggling amid challenging economic conditions.
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He emphasized that what the economy requires is stimulus, not policies that exacerbate the already tough environment.
“Current monetary conditions are too stringent,” Yusuf stated. “With the MPR at 27.25% and the Cash Reserve Ratio (CRR) at 50%, businesses face significant operational hurdles. The recent GDP figures highlight that many key sectors, including manufacturing and trade, are experiencing slowdowns or even contractions.”
He added that tighter financial conditions could further complicate cost structures for businesses, predicting that borrowing costs could soar above 35%. The CPPE also pointed out that the rise in CRR to 50% could limit banks’ ability to lend, negatively impacting the broader economy.
Yusuf called for a more balanced approach to liquidity management, arguing that the private sector should not bear the brunt of public sector-induced liquidity issues. “The focus should be on targeted solutions rather than stifling financial conditions that hinder investment and growth,” he concluded, urging the CBN to reconsider its policy direction in light of the prevailing economic realities.
