• CBN Governor, Olayemi Cardoso
Lagos, Nigeria – July 25, 2024:
“The Federal Government should direct the CBN to conduct a comprehensive assessment of the impact of previous decisions of the Monetary Policy Committee’s (MPC) on inflation rate and the productive sector over the last five years.”
This advise was given by the Manufacturers Association of Nigeria in its reaction to the 296th meeting of the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN), held on July 22-23, 2024.
The MPC, again increased the Monetary Policy Rate (MPR) by 50 basis points from 26.25% to 26.75%, and widened the asymmetric corridor around the MPR from +100 to -300 basis points to +500 to -100 basis points.
Additionally, the MPC maintained the Cash Reserve Ratio (CRR) for deposit money banks at 45% and for merchant banks at 14% and retained the Liquidity Ratio at 30%.
MAN noted that findings from the assessment of the MPR impacts on economic indicators will provide information that will guide future MPC decisions.
Segun Ajayi-Kadir, MAN Director-General, added that despite the continuous increase in MPR over the past two years resulting in a weighty 1,475 basis point hike from 11.5% in May 2022 to 26.25% in May 2024, inflation has remained persistently high, reaching a staggering 34.19% in June, the highest since March 1996.
“Clearly, the new rate will further constrain the growth of the manufacturing sector, as the purchasing power of consumers, production levels, competitiveness and sales will face further decline,”he said.
He stressed that MAN recognises the efforts made by the Monetary Policy Committee (MPC) to stabilise price, as well as the rationale behind its decisions. However, it is expedient that the survival of manufacturing in Nigeria is prioritized when making monetary policy decisions.
This will enable the sector to effectively play its role as the key driver of employment creation, productivity, stable foreign exchange earnings, and economic sustained growth. ▪︎