The Chief Executive Officer of the Centre for the Promotion of Private Enterprise (CPPE), Dr. Muda Yusuf says the Central Bank of Nigeria's decision to increase the interest rate from 14 percent to 15.5 percent will increase the economic brunt on investors who are indebted to banks.
The last two reviews of the Monetary Policy Rate (MPR) failed to tame inflation, and the latest review won't deal with inflation, as the CBN has failed to address its "ways and means" which are "getting close to 20 trillion."
He was referring to the Central Bank's loans to the federal government.
"It is not the lending to the private sector that is causing all of this," he said.
The former Director General of the Lagos Chamber of Commerce and Industry (LCCI) further stated that the CBN has failed to realise "that there is a limit to which monetary policy, particularly all those MPR, Cash Reserve Ratio (CRR) can curb inflation."
"Can MPR or CRR bring down the cost of diesel? Can it correct the scarcity in the foreign exchange market? Can it curb the depreciation in the currency?" he asked.
"The increase is like making a scapegoat of those who borrowed from the bank because it is investors that will bear the brunt of this," the CPPE boss pointed out.
The CBN concluded its Monetary Policy Committee (MPC) meeting on Tuesday, and raised the interest rate to 15.5 per cent from 14 per cent.
The CBN governor told journalists that the option of reducing the policy rate was not considered as it "would be gravely detrimental to reigning in inflation."
"The committee thus agreed unanimously to raise the policy rate to narrow the interest rate gap and reign in inflation. The committee thus voted unanimously to raise the MPR," he said.
“Ten members voted to raise the MPR by 150 basis points, one (voted to raise it) by 100 basis points and one by 50 basis points. 10 members voted to increase CRR (Cash Reserve Ratio) by 500 basis points, while two members voted to increase it by 750 basis points,” the CBN governor added.
