Expert Advises CBN on Monetary Policy, Interest Rate Decision As Inflation Hit 34.8 Per Cent
- The CPPE CEO Muda Yusuf has reacted to the latest Nigeria inflation figures released by the NBS
- He urged the Central Bank of Nigeria not to increase the interest rate as a means to tackle the latest inflation rate
- The new data showed that Nigeria's inflation rate rose to 34.80% in December 2024, up from 34.60% in November
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Legit.ng journalist Dave Ibemere has over a decade of business journalism experience with in-depth knowledge of the Nigerian economy, stocks, and general market trends.
Muda Yusuf, the Chief Executive Officer of the Centre for the Promotion of Private Enterprise (CPPE) has called on the Central Bank of Nigeria (CBN) to suspend monetary policy tightening and interest rate hikes.
According to Yusuf, the decision will help alleviate business operating costs and also rescue the economy.
Source: Getty Images
He noted that the Inflationary pressures continue to be a troubling feature of the Nigerian economy, as reflected in the new inflation numbers.
Legit.ng reported that the National Bureau of Statistics (NBS) released the December inflation figures, which show an increase to 34.80%.from November 2024’s rate of 34.60%.
The bureau noted that the increase was primarily driven by the increased demand for goods and services during the festive season.
Also, the report reveals that the food inflation rate in December 2024 was 39.84% on a year-on-year basis, which is about 5.91% points higher than the rate in December 2023 (33.93%).
This increase was driven by staple foods and grains, including Yam, Water Yam, Sweet Potatoes, Guinea Corn, Maize Grains, and Rice.
CPPE reacts to new inflation rate
Reacting to the inflation figures, Yusuf said the CBN should not be tempted to increase interest rates again to tackle the new inflation figures when the Monetary Policy Committee (MPC) meets.
The Guardian reports that this will save businesses and give consumers some respite as inflation figures rise faster than businesses and Nigerians can cope with.
The CPEE boss predicted that the inflation outlook 2025 promises to be positive and hinged on a sustained moderation in exchange rate volatility and Improvements in foreign reserves.
His words:
“Further, there is also the prospect of easing of geopolitical tensions with the inception of the Trump presidency in a few days as well as a strong base effect, given the high inflationary pressures experienced in 2024.”
How to stop inflation figures
Yusuf also expressed concern over the National Assembly's current fixation on revenue, particularly the arbitrary targets set for MDAs.
He observed that the excessive pressure on MDAs to increase revenue and boost internally generated revenue (IGR) carries significant inflationary consequences.
The CPPE stated:
“The reality is that such pressures are invariably passed on to investors in the form of higher fees, levies, penalties, import duties, regulatory charges, and so forth. These outcomes contradict the government’s aspirations to attract domestic and foreign investments, reduce inflation, and create jobs.
“Revenue targets should be informed by empirical research, the economy's absorptive capacity, and careful consideration of broader economic implications.
"An overemphasis on revenue could harm investments, exacerbate inflationary pressures, deepen poverty, and hinder economic growth.
"A delicate balance must be struck between revenue growth ambitions, the desire to encourage investment, and the commitment to moderating inflation.”
LCCI warns Nigerians to brace for tougher challenges in 2025
Legit.ng reported that the Lagos State Chamber of Commerce has sent a message to business owners to brace for a tougher 2025.
The chamber gave the prediction based on higher interest rates for loans in 2025 from CBN and also further inflationary pressures
To tackle the expected challenges, LCCI called on the government to increase oil production and regulatory support to stabilise the naira
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Source: Legit.ng
