▪︎CBN Governor, Olayemi Cardoso
The World Bank has said that the monetary policy tightening by the Central Bank of Nigeria (CBN) will not address the ravaging inflation in the country.
Before now, the Manufacturers Association of Nigeria (MAN) has been calling on the CBN’s MPC to consider alternative measures for inflation control, particularly those targeting the underlying cost-push factors driving inflation.
MAN, in its advocacy, observed that the sustained monetary policy tightening by the CBN for more than two years has not brought down inflation.
Segun Ajayi-Kadir, the Director- General/CEO of MAN, said that they have been advocating for collaboration between monetary (CBN) and the fiscal authorities (Federal Ministry of Finance) to achieve a more balanced approach that prioritizes both economic stability and the growth of the real sector.
Similarly, the World Bank, in its global economic prospects report released on Wednesday, said that one of the risks of Nigeria’s economic growth is the failure of tightening policies on inflation.
The tightening of the monetary policy rate (MPR) is the increase of interest rate to control soaring inflation.
Pundits say when interest rates are high, manufacturers, contractors, among others, find it difficult to borrow, and by implication, low productivity occasioned by job losses.
Since the resumption of the Monetary Policy Committee (MPC) meeting this year, interest rates have increased from 22.75 perpcent in February to 26.25 per cent in May – a total increase of 750 basis points.