Lawmakers have cautioned the Central Bank of Nigeria (CBN) against raising interest rates beyond the current figure of 27.5% in its bid to curb inflation.
This call comes ahead of the CBN’s 300th Monetary Policy Committee (MPC) meeting scheduled for next week.
At its 299th meeting in February, the Cardoso-led Monetary Policy Committee held rates steady at 27.5%, maintaining the position it stood at during its last meeting in November 2024.
Negative impact on SMEs
Speaking during a meeting with the Statistician-General of the Federation and Chief Executive Officer of the National Bureau of Statistics, Mr. Adeyemi Adeniran, Chairman of the House of Representatives Committee on National Planning and Economic Development, Gboyega Nasir Isiaka, stated that high interest rates have negatively impacted the manufacturing, agriculture, and small and medium enterprise (SME) sectors, which are significant employers of labor.
He noted that the CBN’s policy has yielded great results, as the economy is getting stabilized and confidence is being restored, but there is a need for caution.
“The Monetary Policy Rate (MPR) has been raised 10 times since January 2023 and currently stands at 27.5% from 16.5% in 2023, with the aim of curbing inflation,” he said. “However, it appears that the effectiveness of this policy has been undermined by structural bottlenecks, supply chain inefficiencies, and other factors.
“Therefore, it is our view that, considering the current economic landscape, the monetary authorities, as they meet next week, should consider a more accommodative stance that also promotes growth and employment generation.”
Unemployment rate drops
Also speaking, NBS CEO Adeniran reported that the second quarter of 2024 recorded an unemployment rate of 4.3%, down from 5.3% in the previous quarter.
He noted that unemployment was more prevalent among females (5.1%) than males (3.4%) and was higher in urban areas (5.2%) compared to rural areas (2.8%).
Additionally, young people faced a relatively higher unemployment rate of 6.5% compared to the headline figure. Furthermore, 12.5% of youths were not in employment, education, or training, with the rate higher among young females (14.3%) compared to young males (10.9%).
The Statistician-General said that the Q3 and Q4 2024 reports were being finalized and would be disseminated to the public after completion.
What You Should Know
- The MPC consists of 12 members, including the CBN Governor as Chairman.
- The Committee is empowered under the CBN Act of 2007 to determine monetary policy parameters and ensure price stability.
- Key indicators watched at the MPC include inflation rate (currently above target), GDP growth, exchange rate performance, and fiscal-monetary policy alignment.
