CPPE cautions CBN against further interest rate hikes ahead of MPC meeting

The Centre for the Promotion of Private Enterprise (CPPE) has warned the Central Bank of Nigeria’s Monetary Policy Committee (MPC) against further increases in interest rates, arguing that additional monetary tightening could weaken economic recovery and worsen pressure on businesses and households.

The economic policy advocacy group issued the warning ahead of the MPC’s 305th meeting, where policymakers are expected to review inflation trends, exchange-rate stability, and broader macroeconomic conditions.

In a statement released on Sunday and signed by its Chief Executive Officer, Dr. Muda Yusuf, the CPPE said Nigeria’s economic environment remains too fragile to absorb additional tightening measures.

What the organisation is saying

The CPPE said expectations ahead of the MPC meeting should be viewed within the context of rising geopolitical risks, fiscal pressures, and persistent structural weaknesses in the Nigerian economy.

“Expectations ahead of the forthcoming 305th meeting of the Monetary Policy Committee should be situated within the context of evolving domestic macroeconomic realities, heightened geopolitical uncertainties and emerging fiscal liquidity risks confronting the Nigerian economy,” the statement noted.
“The Nigerian economy remains fragile and structurally constrained. Further tightening of monetary conditions could significantly weaken credit expansion, dampen investment appetite and undermine the fragile recovery momentum within the real sector,” Yusuf stated.
“Excessively elevated interest rates also heighten the risks of loan defaults, weaken the financial sustainability of businesses and exacerbate sovereign debt service pressures,” the group added.

The organisation warned that aggressive monetary tightening could negatively affect industrial productivity, private sector investment, employment generation, and overall economic growth.

More insights

The CPPE argued that Nigeria’s inflation challenge is largely structural and supply-driven rather than demand-induced, making conventional monetary tightening less effective in addressing the root causes of rising prices.

According to the group, inflationary pressures are being driven primarily by high energy costs, transportation expenses, logistics bottlenecks, weak infrastructure, and production inefficiencies.

The organisation said higher interest rates are already increasing financing costs for businesses and consumers.
CPPE maintained that a tighter monetary policy is more effective in addressing demand-pull inflation than supply-side inflation shocks.
The group called for a more pragmatic and context-sensitive monetary policy framework tailored to the realities of developing economies like Nigeria.

The advocacy group also stressed that Nigeria’s economy requires policies capable of balancing inflation control with growth, productivity expansion, and job creation.