THE Centre for the Promotion of Private Enterprise (CPPE) on Tuesday lauded the decision of the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) to hold the interest rate.
Dr Muda Yusuf, the Chief Executive Officer of CPPE, in an interview with the News Agency of Nigeria (NAN) in Lagos, said the measure was timely to protect the economy.
NAN reports that the MPC retained the Monetary Policy Rate (MPR) at 27.5 per cent.
It also maintained the Cash Reserve Ratio (CRR) at 50 per cent for Deposit Money Banks and 16 per cent for Merchant Banks.
The committee retained the Liquidity Ratio at 30 per cent, and the Asymmetric Corridor was held at +500/-100 basis points around the MPR.
Yusuf said that the current disruptions caused by President Donald Trump’s tariff hikes required caution due to the Nigerian economy’s vulnerability to global developments.
He added that holding rates was a needed buffer against global shocks to stabilise the nation’s economy.
He said that the CBN’s decision to hold rates aligned with the expectations of the center and many analysts.
He said that current global uncertainties posed a risk to Nigeria’s macroeconomic stability, hence the need to hold rates as done by the apex bank.
“For me, I think it is a welcome development because I believe that the monetary situation in the economy is already tight enough.
“So, I was not expecting that there could be any further tightening because CRR at 50 per cent and MPR at 27.5 per cent with an asymmetric corridor of +500 basis points is already practically choking the financial system, and it has already exacerbated the cost of funds for businesses.
“So, for me, ab initio, tightening was not an option.
“So, the holding of rates, I think it is tolerable, especially when we situate it within the context of the uncertainties in the global economy triggered by the Trump tariff because the full effect of the disruptions that the Trump tariff has caused has not fully manifested,” he said.
Yusuf explained that the relief currently being experienced globally was as a result of a pause in rates between China and the United States for a period of 90 days.
According to him, the current developments also have implications for both commodity prices and capital flows.
“So, those are two major global variables that pose a risk to our macroeconomic stability,” he said.
He said that the MPC applied caution in its approach to monetary policy not to ease rates at this time.
He said although experts feel that the current rates are high, noting that the decision of the CBN would help to monitor the impact of the Trump tariff on the global economy.
“For global crude oil price and the implications for capital flows. And to some extent, even implications for imported inflation, particularly for businesses that import from the United States.
“So, for me, I think it’s something we can live with at least for the next two months or so until we have the next MPC meeting,” he said.
