Financial analysts are calling for the Central Bank of Nigeria (CBN) to pause interest rate increases to support the nation’s struggling economy. This appeal coincides with the upcoming Monetary Policy Committee (MPC) meeting on Monday and Tuesday, which aims to reassess key monetary policies, including interest rates.
Professor Uche Uwaleke, a financial economist at Nasarawa State University, emphasized that recent decreases in inflation, noted in July and August, bolster the case for halting further rate hikes. He argued that the negative effects of high interest rates on growth and employment are increasingly apparent, especially amid ongoing stagflation.
Uwaleke also pointed to trends in major global central banks, such as the U.S. Federal Reserve, which have begun to pause or reduce rates. He suggested that the MPC explore alternative measures to manage money supply instead of relying solely on the Monetary Policy Rate (MPR).
Echoing Uwaleke, Professor Anthony Kila highlighted the need for the MPC’s decisions to have a direct impact on the lives of Nigerians. He criticized the current framework for failing to address the realities of the economy, asserting that exchange rates play a more significant role in daily life than interest rates.
Kila called for a reevaluation of how inflation and economic growth are measured, advocating for policies that prioritize consumer finance and enhance fiscal management.
In recent months, the CBN has adopted a tightening approach to monetary policy, raising the MPR to combat rising inflation. In July, the interest rate was increased by 50 basis points to 26.75%, while various liquidity ratios were adjusted.
As the MPC convenes for its 297th meeting, analysts anticipate a cautious stance given the recent positive trends in macroeconomic indicators, with many experts suggesting that now may not be the time for further rate adjustments.
