By Adedapo Adesanya
There are indications that the Central Bank of Nigeria (CBN) will hike interest rates later today to further strengthen the Naira and cool inflation which hit 34.19 per cent in June despite facing increased opposition from private sector players.
The Monetary Policy Committee (MPC) started its meeting on Monday and will end today, with the announcement of decisions by Governor Yemi Cardoso at 2 pm.
Mr Cardoso had in recent weeks signalled that the bank would continue to use tools such as rate hikes to fight the country’s high inflation, which has risen for the last 18 consecutive months.
For analysts, another hike will be in the pipeline after the committee had increased the level to 26.25 per cent this year alone, a 750 basis points increase from 18.75 per cent last year.
A Bloomberg survey expects the CBN to raise interest rates by 75 basis points to 27 per cent.
On its part, Cowry Asset Management, in its weekly report, stated that while the slow acceleration in the headline inflation over the last four months indicated that the CBN’s tightening measures were permeating the economy, but warned that there might be side effects.
However, this comes amid mounting opposition, especially from manufacturers and business owners.
The Chief Executive Officer (CEO) of the Centre for the Promotion of Private Enterprise, Mr Muda Yusuf, called on the apex bank to exercise caution in raising interest rates to avoid further burdening the private sector..
“Knowing the disposition of the Central Bank of Nigeria, given the fact that the bank has repeatedly affirmed its commitment to taming inflation, there is a very high probability that the MPC is likely to hike interest rates, although it may be marginal.
“My wish is that the central bank should put a hold on interest rate hikes for now. I believe that monetary policy instruments have been practically overstretched in this quest to tame inflation,” he said.
Supporting this, the President of the National President of the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA), Mr Dele Oye, said another hike in the benchmark interest rate will have several potential consequences for businesses.
“While the primary goal of raising interest rates is often to control inflation, it can have a mixed impact on businesses. On one hand, controlling inflation helps maintain purchasing power and economic stability; on the other hand, the immediate effects of higher rates can strain business operations,” he warned.