The Central Bank of Nigeria is set to commence its 302nd Monetary Policy Committee meeting on Monday, a crucial gathering that will shape the country’s economic trajectory. This development comes as the Centre for the Promotion of Private Enterprise has urged the committee to consider reducing the interest rate and cash reserve ratio. The two-day meeting in Abuja coincides with the second-year anniversary of CBN Governor Olayemi Cardoso and his deputy governors in office.
As the MPC convenes, key policy decisions regarding inflation and interest rates will be on the agenda. Nigeria has witnessed a fifth consecutive decline in inflation, with the rate standing at 21.12 percent in August, while interest rates have remained at 27.50 percent since July. Despite this decline, experts such as Babajide Ogunsawo point out that prices of goods and services remain high, characterizing the situation as disinflation rather than deflation.
The Centre for the Promotion of Private Enterprise has emphasized the need for a cut in the country’s interest rate and cash reserve ratio to reduce the cost of production and subsequently lower prices. According to Muda Yusuf, the CEO of CPPE, the current Monetary Policy Rate of 27.5 percent and the Cash Reserve Ratio of 50 percent have significantly increased the cost of funds, leading to elevated lending rates that suppress private sector borrowing. This is particularly evident in sectors such as manufacturing, agriculture, SMEs, real estate, and others.
The MPC’s meeting is being closely watched by stakeholders in the financial sector and the general public, who are awaiting the committee’s next line of action. With the country’s economic landscape still navigating the challenges of high prices and borrowing costs, the decisions made during this meeting will be crucial in determining the direction of Nigeria’s economic policy. As the meeting commences, all eyes will be on the MPC to see how they will address these pressing issues and work towards creating a more favorable economic environment.
