The continuous rising of inflation, if not controlled can hit 25 per cent before the end of the years 2023, the Nigeria Employers Consultative Association has warned .
In a statement on Wednesday, the Director-General of NECA, Mr Wale Oyerinde, said the recent decision by the Monetary Policy Committee of the Central Bank of Nigeria to raise the Monetary Policy Rate by 25 basis points to 18.75 per cent could be chaotic to the growth trajectory of the nation.
He said tightening monetary policy stance by raising the anchor rate had proved ineffective.
According to him, “Based on the recent decision by the Monetary Policy Committee of the Central Bank of Nigeria to raise the Monetary Policy Rate by 25 basis points to 18.75 per cent, such increase could be chaotic to the growth trajectory of the nation.
“It is apt that the apex bank collaborates with fiscal authorities in addressing the fundamentals behind the persistent increase in consumer prices, which has defied the policy measures put in place by previous rate hikes.
“Tightening monetary policy stance by raising the anchor rate has proved ineffective, as inflation has been rising steadily and could climb as high as 25 per cent before year end.”
Oyerinde urged the CBN to focus more on tackling the structural drivers of inflation, especially the supply side.
He said, “The focus of CBN should be on tackling the structural drivers of inflation, mostly the supply side. In the light of hardship being experienced by the populace, it would have been appealing that the CBN retain the MPR for a while, in order to observe the impact of the current executive orders on the economy.
“We also understand the CBN’s stance that raising interest rate is needed to attract foreign inflows into the economy to moderate pressure on the foreign exchange rate.”
NECA DG said in its view, high cost of borrowing was injurious to business growth. Amid tough business conditions, small and medium enterprises needed to be supported with relatively low interest rates to stimulate access to liquidity, he said.
The NECA DG urged the CBN to work with relevant government agencies in addressing supply-driven inflationary factors rather than supporting future hike in MPR.
He said, “So, rather than supporting any future hikes in the MPR, the apex bank should collaborate with relevant government agencies in addressing supply-driven inflationary factors such as high energy prices; high costs of logistic and FX pressure amongst others.
“The focus should be driving up investment and ensuring the sustainability of local businesses as one of the key elements to improving economic stability.”
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