The Central Bank of Nigeria’s (CBN) decision to pause rate hikes has been commended by the Centre for the Promotion of Private Enterprise (CPPE). Dr. Muda Yusuf, CPPE’s CEO, praised the move, citing the recently rebased inflation rate computation, which has declined to 24.48%.
However, Yusuf emphasized that more needs to be done. He called for future reductions in rates and expressed concerns about the Cash Reserve Ratio (CRR) rates. The CRR, currently at 50%, is the highest globally, with Turkey’s rate being the closest at 25%.
Yusuf stressed the need for a gradual reduction of the Monetary Policy Rate (MPR) and a relaxation of the CRR. He noted that some prices, such as energy and pharmaceuticals, are already beginning to drop, and maintaining exchange rate stability could lead to further price reductions.
The CPPE CEO expressed optimism about the inflation outlook but advised the CBN committee to re-evaluate its decisions on tightening measures. He warned that continuing on the current trajectory could disconnect the financial system from the real economy, impacting economic growth.
The CBN’s Monetary Policy Committee (MPC) retained the MPR at 27.50% and the asymmetric corridor around the MPR at +500/-100 basis points during its 299th meeting. The apex bank also retained the CRR of Deposit Money Banks at 50%.
