INFLATION: OPS OPPOSES FRESH INTEREST RATE HIKE AS MPC MEETS TODAY
1. Overview:
- The Organised Private Sector (OPS) has expressed opposition to any increase in interest rates as the Central Bank of Nigeria’s (CBN) Monetary Policy Committee (MPC) meets in Abuja.
2. Previous Interest Rate Changes:
- Rate Hikes: This is the fourth MPC meeting of 2024. The committee has previously increased the benchmark interest rate to address inflation. The most recent hike was in May, raising the Monetary Policy Rate (MPR) from 24.75% to 26.25%.
3. CBN's Stance:
- Governor's Comments: CBN Governor Dr. Olayemi Cardoso has indicated that the MPC remains committed to combating inflation.
4. Inflation Data:
- Current Inflation Rate: Nigeria’s inflation rate reached 34.19% in June 2024, up from 33.95% in May 2024.
- Year-on-Year Increase: This represents an increase of 11.40 percentage points from June 2023.
- Month-on-Month Increase: The monthly inflation rate rose to 2.31% in June from 2.14% in May 2024.
5. Analysts' Views:
- Cowry Asset Management: Analysts suggest that despite some moderation in inflation, further interest rate hikes are likely. They anticipate a potential increase of 25 to 50 basis points, citing ongoing inflationary pressures and risks like higher minimum wages and naira depreciation.
6. OPS and Business Impact:
- CPPE's Caution: The Centre for the Promotion of Private Enterprise, led by Dr. Muda Yusuf, urges caution, highlighting the negative impact of frequent rate hikes on the private sector.
- NACCIMA's Concerns: Dele Oye, NACCIMA President, warns that higher interest rates could increase business financing costs, slow down investments, and reduce consumer spending.
- Small Business Concerns: Dr. Femi Egbesola of the Association of Small Business Owners of Nigeria criticizes the consistent rate hikes as ineffective and harmful.
7. Alternative Solutions:
- Dr. Ikenna Nwosu's Suggestion: A consultant with the Nigerian Economic Summit Group proposes exploring other methods to manage inflation, such as improving liquidity management outside the banking sector.
1. Overview:
- The Organised Private Sector (OPS) has expressed opposition to any increase in interest rates as the Central Bank of Nigeria’s (CBN) Monetary Policy Committee (MPC) meets in Abuja.
2. Previous Interest Rate Changes:
- Rate Hikes: This is the fourth MPC meeting of 2024. The committee has previously increased the benchmark interest rate to address inflation. The most recent hike was in May, raising the Monetary Policy Rate (MPR) from 24.75% to 26.25%.
3. CBN's Stance:
- Governor's Comments: CBN Governor Dr. Olayemi Cardoso has indicated that the MPC remains committed to combating inflation.
4. Inflation Data:
- Current Inflation Rate: Nigeria’s inflation rate reached 34.19% in June 2024, up from 33.95% in May 2024.
- Year-on-Year Increase: This represents an increase of 11.40 percentage points from June 2023.
- Month-on-Month Increase: The monthly inflation rate rose to 2.31% in June from 2.14% in May 2024.
5. Analysts' Views:
- Cowry Asset Management: Analysts suggest that despite some moderation in inflation, further interest rate hikes are likely. They anticipate a potential increase of 25 to 50 basis points, citing ongoing inflationary pressures and risks like higher minimum wages and naira depreciation.
6. OPS and Business Impact:
- CPPE's Caution: The Centre for the Promotion of Private Enterprise, led by Dr. Muda Yusuf, urges caution, highlighting the negative impact of frequent rate hikes on the private sector.
- NACCIMA's Concerns: Dele Oye, NACCIMA President, warns that higher interest rates could increase business financing costs, slow down investments, and reduce consumer spending.
- Small Business Concerns: Dr. Femi Egbesola of the Association of Small Business Owners of Nigeria criticizes the consistent rate hikes as ineffective and harmful.
7. Alternative Solutions:
- Dr. Ikenna Nwosu's Suggestion: A consultant with the Nigerian Economic Summit Group proposes exploring other methods to manage inflation, such as improving liquidity management outside the banking sector.