The House of Representatives has warned the Central Bank of Nigeria, CBN, against increasing the benchmark interest rate in the country.
The Chairman, House Committee on National Planning and economic Development,Gboyega Isiaka gave the warning during a meeting with the Statistician General of the federation and chief executive officer of the National Bureau of Statistics, NBS, Adeyemi Adeniran, in Abuja, the nation’s capital.
Isiaka’s remark comes as the the CBN is set to hold its Monetary Policy Committee, MPC, meeting this week amidst fears in the economic sector that the official interest could be hiked again. The Yemi-Cardoso-led CBN has hiked the benchmark interest rates 10 times since 2023.
As the apex bank Governor, Yemi Cardoso has insisted on high interest rates in curbing inflation, even though experts in the sector also argue that the hike has led to unintended consequences, particularly the high cost of food and commodities.
The CBN should not concentrate on the high interest, as the only interventionist tool to controlling micro economic problems facing the country, the experts say.
The Committee chairman questioned the effectiveness of using the interest rate to control demand-pull- inflation, saying after it has been raised multiple times, the problem has only worsen.
The policy, he said, has affected key sectors in the economy such as the SMEs, agriculture and manufacturing the major drives of employment generation in the economy.
The lawmaker however applaued the CBN for making some policies which according to him has helped the country to recover in some areas.
He said, “The monetary policy rate (MPR) has been raised 10 times since January 2023 and currently stands at 27.5 percent from 16.5 percent in 2023, with the aim of curbing demand-pull inflation.
“However, it will appear that the effectiveness of this policy has been undermined by structural bottlenecks, supply chain inefficiencies, etc.
“It is, therefore, our view that considering the current economic landscape, the monetary authorities, as they meet this week, should consider a more accommodative stance that also promotes growth and employment generation.”
The magazine reported that Cardoso has stated that the CBN would “do whatever is necessary” to curb inflation as part of its ‘orthodox monetary policies.
The MPC “will continue to do what has to be done to ensure that inflation comes down,” he said.
“Let’s face it: for a long period of time, the CBN did not embrace orthodox monetary policies.
“We want to go back to using an orthodox method, and it will take us to where we want to go.”
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