CBN rate hikes fuelled inflation, says tax reform committee chair Taiwo Oyedele

Taiwo Oyedele, chair of the Presidential Committee on Fiscal Policy and Tax Reforms, said on Thursday that the monetary policy rate of the Central Bank of Nigeria (CBN) fuelled inflation in the country.

Oyedele, who spoke at a panel session during the PwC Executive Roundtable on Nigeria’s 2025 Budget and Economic Outlook, said this while arguing that the country could achieve inflation rate of 15 percent this year.

To curb soaring inflation, the CBN embarked on an aggressive rate hiking cycle last year, starting with a 400-basis-points increase in its benchmark interest rate in February and a total of 875 basis points to 27.5 percent. While it translated to huge interest incomes for banks, it put immense pressure on businesses as borrowing costs surged.

“I hold a different view, and I know I’ll get into trouble now because the MPR, as far as I’m concerned, was a factor that was pushing inflation up, not bringing it down, because you need to finance your working capital,” he said. “If you finance your working capital at 35-40%, you’ll recover it. Look at manufacturers, they have unsold inventories of over N1 trillion. That’s finance tied down; they’ll recover it.”