Business Briefings
CPPE Warns CBN Against Further Interest Rate Hikes
The Centre for the Promotion of Private Enterprise has cautioned the Central Bank of Nigeria against implementing additional interest rate increases ahead of the Monetary Policy Committee meeting, warning that further monetary tightening could weaken economic recovery and increase pressure on businesses and households.
The group issued the warning ahead of the MPC’s 305th meeting, where policymakers are expected to assess inflation trends, exchange rate stability, and broader macroeconomic conditions.
In a statement signed by its Chief Executive Officer, Muda Yusuf, the organisation stated that Nigeria’s economic environment remains too fragile to absorb additional tightening measures.
“Expectations ahead of the forthcoming 305th meeting of the Monetary Policy Committee should be situated within the context of evolving domestic macroeconomic realities, heightened geopolitical uncertainties and emerging fiscal liquidity risks confronting the Nigerian economy,” the statement noted.
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The organisation stressed that aggressive monetary tightening could further constrain investment, weaken credit growth, and slow recovery within the productive sector of the economy.
“The Nigerian economy remains fragile and structurally constrained. Further tightening of monetary conditions could significantly weaken credit expansion, dampen investment appetite and undermine the fragile recovery momentum within the real sector,” Yusuf stated.
The CPPE further warned that excessively high interest rates could increase financial stress for businesses and worsen debt service obligations across the economy.
“Excessively elevated interest rates also heighten the risks of loan defaults, weaken the financial sustainability of businesses and exacerbate sovereign debt service pressures,” the organisation added.
According to the group, continued tightening could negatively affect industrial productivity, employment generation, private sector investment, and overall economic growth.
The CPPE maintained that Nigeria’s inflationary pressures are largely structural and supply-driven rather than demand-induced, making conventional monetary tightening less effective in addressing the root causes of rising prices.
The organisation identified high energy costs, transportation expenses, logistics bottlenecks, weak infrastructure, and production inefficiencies as key drivers of inflation across the country.
It stated that rising borrowing costs were already increasing financing pressure on businesses and consumers.
The advocacy group argued that tight monetary policy frameworks are generally more effective in addressing demand-pull inflation than supply-side inflation shocks.
According to the CPPE, Nigeria requires a more pragmatic and context-sensitive monetary policy approach capable of balancing inflation control with growth, productivity expansion, and job creation.
The organisation also stressed the importance of policies that support the real sector while maintaining macroeconomic stability amid prevailing global uncertainties and domestic structural challenges.
