The Centre for the Promotion of Private Enterprise, CPPE, said the continued hawkish stance of the Central Bank of Nigeria, CBN, by further tightening the interest rate to 27.75 per cent will worsen imbalances in the country’s real sectors.
The director of CPPE, Muda Yusuf, disclosed this in a statement on Tuesday.
This comes as Media Talk Africa reports that the CBN Monetary Policy Committee raised interest by 25 basis points to 27.50 per cent.
Reacting, CPPE stated that the CBN’s decision to further raise the interest rate is troubling amid the declining growth recorded in the country’s critical sectors of the economy.
CPPE noted that Nigeria’s 3.46 per cent growth in domestic product in the third quarter of 2024 showed a clear disconnect between the financial services sector and the real economy.
This comes as CPPE said that manufacturing, agriculture, real estate, air transport, and textile sectors need monetary and fiscal support, not interest rate hikes.
“It is troubling that despite the declining growth performance of many critical sectors of the economy as evidenced in the third quarter GDP report, the MPC still continued its tightening stance.
“The GDP sectoral performance report also revealed a glaring disconnect between the financial services sector and the real economy.
“The financial services sector recorded a growth of 32 per cent, while agriculture and manufacturing grew by 1.14 per cent and 0.92 per cent. This hawkish disposition would deepen these distortions.
“Meanwhile strategic economic sectors such as agriculture, manufacturing and real estate recorded declines in growth in the third quarter. Air transport and textile remained in recession. These sectors need monetary and fiscal support, not a further tightening of monetary conditions.
“In the meantime, we urge the CBN to upscale its support for development finance institutions to make up for the financing challenges created by the sustained tight monetary policy regime,” he stated.
