CPPE Warns CBN Against Further Rate Hike Ahead of MPC Meeting
The Centre for the Promotion of Private Enterprise (CPPE) has warned the Central Bank of Nigeria (CBN) against further interest rate hikes, arguing that aggressive monetary tightening will stifle economic growth and crush private sector investment.
The advisory comes ahead of the CBN’s 305th Monetary Policy Committee meeting, where policymakers are expected to grapple with rising domestic inflation, heightened geopolitical uncertainties, and early signs of liquidity injections ahead of the 2027 electoral cycle.
In a statement released by CPPE Chief Executive Officer, Muda Yusuf, the economic think-tank acknowledged the complex macroeconomic realities facing the MPC.
He noted that escalating tensions in the Middle East have triggered global energy market volatility, which is already transmitting into higher domestic energy and logistics costs.
The CPPE highlighted that early political spending and improved Federation Account Allocation Committee disbursements to subnational governments are flooding the economy with excess liquidity. While the CBN recently expressed concerns to state governments regarding the inflationary consequences of these fiscal injections, the CPPE cautions that raising interest rates is the wrong remedy for Nigeria’s current economic ailments.
“The Nigerian economy remains fragile and structurally constrained,” Yusuf said. “Further tightening of monetary conditions could significantly weaken credit expansion, dampen investment appetite and undermine the fragile recovery momentum within the real sector.”
The CPPE argues that Nigeria’s inflation is predominantly “cost-push and supply-side driven,” fueled by high energy prices, transportation bottlenecks, and infrastructure deficits. According to the organization, traditional monetary tightening is effective against demand-pull inflation but falls short when addressing supply-side shocks.
Instead of curbing inflation, the group warned that further rate hikes would disproportionately harm the productive sector by increasing the cost of capital, weakening manufacturing competitiveness, suppressing small and medium enterprise growth, and heightening the risk of loan defaults.
Urging a departure from monetary policy orthodoxy, the CPPE called for a more nuanced and context-sensitive approach. The group advised the MPC to pause its tightening cycle and maintain a balanced stance that supports price stability without destroying the economy’s supply-side capacity.
“Sustainable disinflation in Nigeria will depend far more on improvements in productivity, energy security, logistics efficiency, exchange rate stability, domestic petroleum refining capacity, and overall supply-side reforms than on aggressive monetary tightening,” Yusuf said.
