The Nigeria Employers’ Consultative Association (NECA) has said the increase of the monetary policy rate (MPR) to 18.75 per cent is chaotic with negative consequences for the economy.
Director-General of NECA, Adewale-Smatt Oyerinde, said it is apt that the CBN collaborate with fiscal authorities in addressing the fundamentals behind the persistent increase in consumer prices, which he said has defied policy measures by the Central Bank of Nigeria (CBN).
According to him, tightening monetary policy stance by raising the anchor rate has proved ineffective, as inflation has been rising steadily and could climb to 25 per cent before year-end.
He maintained that the focus of the apex bank should be on tackling the structural drivers of inflation, mostly the supply-side factors.
In the light of hardship being experienced by the populace, he stressed that it would have been appealing that the CBN retains the MPR for a while, to observe the impact of the recent executive orders on the economy.
He said the focus should be driving up investment and ensuring the sustainability of local businesses.
“We also understand the CBN’s stance that raising interest rates is needed to attract foreign inflows into the economy to moderate pressure on the foreign exchange rate.
“In our view, the high cost of borrowing is injurious to business growth. Amid tough business conditions, small and medium enterprises need to be supported with relatively low-interest rates to stimulate access to liquidity.
“So, rather than supporting any future hikes in the MPR, the apex bank should collaborate with relevant government agencies in addressing supply-driven inflationary factors such as high energy prices; high costs of logistics and FX pressure amongst others,” Oyerinde said.
