Business
THE Centre for the Promotion of Private Enterprise (CPPE) has urged the Monetary Policy Committee (MPC) to halt interest rate hikes at its forthcoming meeting due to already stretched monetary policy instruments.
Dr Muda Yusuf, Chief Executive Officer of CPPE, made the call in an interview with the News Agency of Nigeria (NAN) on Sunday in Lagos.
NAN reports that the CBN has scheduled its 296th bi-monthly MPC meeting for Monday, July 22, and Tuesday, July 23, in Abuja.
Yusuf noted that the committee might ensure that the hike is minimal, considering the CBN’s efforts to stabilise the economy.
“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.
“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,” he said.
Mr Johnson Chukwu, the Managing Director of Cowry Asset Management Ltd., predicted that the MPC might hike the rates by 50 or 75 basis points, given the CBN Governor’s commitment to controlling inflationary pressures.
Chukwu highlighted current economic parameters, noting inflation at 34.19 per cent, food inflation at 40.66 per cent and recent pressures on the Naira.
“Inflation has not abated, even the month-on-month inflation spiked in June.
“Given the CBN Governor’s avowed position that they will continue to increase rates as long as inflationary pressures persist, I think they are likely going to increase it by 50 to 75 basis points, which could take it to between 26.75 per cent to 27 per cent,” Chukwu said.
Proposing solutions, Chukwu called for holistic fiscal measures to address the root causes of foreign exchange volatility.
He emphasised that inflationary pressures were not due to excess liquidity but rather insufficient food production, insecurity, and FX scarcity leading to Naira depreciation from low crude oil production.
“If you want to address the issue from the root cause, you have to deal with issues of insecurity in major food belts of the nation to improve food production.
“Additionally, addressing insecurity and pipeline breaches in oil-bearing localities will improve crude production,” Chukwu explained.
Chukwu also stressed the need for upstream operators to increase investments in exploration and production, suggesting that a productivity-based approach, rather than monetary policy tightening, is essential for solving the problem. (NAN)
A.I
July 22, 2024 @ 07:06 GMT|
Tags: Central Bank of Nigeria Centre for the Promotion of Private Enterprise Dr Muda Yusuf Mr Johnson Chukwu
