CPPE Raises Concern over CBN’s MPR Hike to 27.50%
The Centre for the Promotion of Private Enterprise (CPPE) has raised concerns over the Central Bank of Nigeria’s (CBN) sustained tightening of the Monetary Policy Rate (MPR), now at 27.50 percent.
Dr. Muda Yusuf, Chief Executive Officer, CPPE, stated in Lagos on Tuesday that the continued rate hikes by the Monetary Policy Committee (MPC) could further stifle economic growth.
The MPC of the CBN, during its 298th meeting, further raised the country’s interest rate to 27.50 percent from 27.25 percent.
It, however, retained the Cash Reserved Ratio (CRR) at 50 percent for Deposit Money Banks and 16 percent for merchant banks.
The committee also retained the liquidity ratio at 30 percent and the asymmetric corridor at +500/-100 basis points around the MPR.
“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 GDP sectoral performance report also revealed a glaring disconnect between the financial services sector and the real economy,” he said.
He said that the financial services sector recorded a growth of 32 percent, while agriculture and manufacturing grew by 1.14 percent and 0.92 percent.
Yusuf said, “This disposition will deepen these distortions. Meanwhile, strategic economic sectors such as agriculture, manufacturing, and real estate recorded declines in growth in the third quarter.
“Air transport and textiles remained in recession. These sectors need monetary and fiscal support, not a further tightening of monetary conditions.
The financial expert called on CBN to increase support for development finance institutions to address financing challenges caused by the sustained tight monetary policy regime. #CPPE Raises Concern over CBN’s MPR Hike to 27.50% #
