As reactions continue to trail the surprise decision of the Central Bank of Nigeria (CBN)’s Monetary Policy Committee (MPC) to raise its benchmark interest rate to 13 per cent from 11.5 per cent, the Centre for the Promotion of Private Enterprise (CPPE) has expressed doubts about the kind of impact the move would have on inflation.
In its communiqué announcing the rate hike on Tuesday, MPC had said the decision was primarily aimed at curbing accelerating inflation. Speaking on the decision, CBN Governor, Mr. Godwin Emefiele, said that global supply disruptions occasioned by Russia’s invasion of Ukraine and the resurgence of COVID-19 in China – the hub of global manufacturing – caused an unprecedented food and energy price surge, adding that these events triggered high levels of inflation globally.
He said that the apex bank would keep the new rate until it is able to moderate inflation. However, reacting to the decision in a statement made available to newsmen, the Founder/ CEO, CPPE, Dr. Muda Yusuf, said that while the hike in CBN’s benchmark interest rate – the Monetary Policy Rate (MPR) – is “understandable,” he was not confident that the move would address the high inflation. He stated: “The outcome of the MPC meeting of 24th May 2022 was not unexpected having regard to the intense inflationary pressures, the increasing risks to price stability and the policy tightening trend by central banks globally. “The primary mandate of CBN is price stability. Numerous headwinds had posed significant risks to this critical CBN objective. Some of these include the surge in commodity prices and impact on energy cost, spike in domestic liquidity from electioneering related spending and global supply chain disruptions. The hike in MPR by 150 basis points to 13 per cent by the MPC is therefore understandable.