The Centre for the Promotion of Private Enterprise (CPPE) has asked the Central Bank of Nigeria (CBN) to refrain from further monetary tightening at the upcoming 305th Monetary Policy Committee (MPC) meeting. 

The founder, CPPE, Muda Yusuf, made the call in a statement on Sunday, warning that higher interest rates could weaken economic growth, investment and job creation.

The MPC meeting is scheduled for May 19 and May 20.

Mr Yusuf said geopolitical tensions involving the U.S., Israel and Iran had triggered renewed volatility in the global oil market, pushing crude oil prices higher.

According to him, rising oil prices are already increasing domestic energy costs and worsening inflation through higher transportation, logistics and production expenses.

He added that election-related spending ahead of the 2027 general elections could further increase liquidity in the economy.

Mr Yusuf said growing political spending and stronger Federation Account Allocation Committee (FAAC) disbursements to states posed additional inflationary risks.

He noted that the MPC might be inclined to retain its current tight monetary stance to contain inflation expectations and sustain investor confidence.

The CPPE chief executive, however, cautioned against additional rate hikes, saying they could weaken credit growth and reduce investment in the productive sector.

He said excessively high borrowing costs might increase loan defaults, strain businesses and worsen sovereign debt service obligations.

According to Mr Yusuf, Nigeria’s inflation is largely driven by structural and supply-side challenges rather than excessive consumer demand.

He identified major inflation drivers as high energy costs, transportation expenses, logistics bottlenecks and weak productive capacity.

“Monetary tightening is less effective in addressing cost-push inflation than demand-driven inflation,” he said.

Mr Yusuf said higher interest rates would increase the cost of capital, reduce manufacturing competitiveness and suppress the growth of small and medium enterprises.

He urged the MPC to adopt a balanced policy approach that supports productive investment while maintaining price stability.

He noted that sustainable moderation in inflation would depend more on improved productivity, energy security, exchange rate stability, local refining capacity and broader structural reforms than on aggressive monetary tightening. 

(NAN)