Reps warn CBN against unintended consequences of high interest rates

The House of Representatives Committee on National Planning and Economic Development has advised the Central Bank of Nigeria (CBN) to be wary of unintended consequences of high interest rates in its bid to curb inflation.

Chairman of the committee, Hon. Gboyega Nasiru, gave the warning Wednesday during a meeting with the Statistician-General of the Federation and Chief Executive Officer of the National Bureau of Statistics (NBS), Mr. Adeyemi Adeniran, in Abuja.

He said the warning became necessary as the CBN prepares for its 300th Monetary Policy Committee (MPC) meeting scheduled for early next week, adding that there appears to be a general consensus that the current administration has taken bold steps and pursued market-driven reforms.

“The Monetary Policy Rate (MPR) has been raised 10 times since January 2023, currently standing at 27.5 per cent, up from 16.5 per cent in 2023, in a bid to tackle demand-pull inflation. However, it appears the effectiveness of this policy has been undermined by structural bottlenecks and supply chain inefficiencies.

“It is therefore our view that, given the current economic landscape, the monetary authorities at their meeting next week, should consider a more accommodative stance that supports both growth and employment,” Nasiru said.

The statiscian-general noted that the latest data released by the NBS, covering the second quarter of 2024, reported an unemployment rate of 4.3 percent, down from 5.3 percent in the previous quarter, adding that unemployment was more prevalent among females (5.1 percent) than males (3.4 percent), and higher in urban areas (5.2 percent) compared to rural areas (2.8 percent).