Interest Rate Hike Will Increase Cost Of Borrowing – NECA Tells CBN

The Nigeria Employers’ Consultative Association (NECA) has said the increase of the Monetary Policy Rate (MPR) by the Central Bank of Nigeria (CBN) will increase the cost of borrowing which would further discourage investments in the sector.

Naija News reported that the Governor of the apex bank, Godwin Emefiele, on Wednesday, announced that the MPR has increased from 18 percent to 18.5 percent.

In a chat with The Punch, the Director General of NECA, Wale Oyerinde urged the government especially, the monetary policy authority, to tackle inflation by addressing the issue of imported inflation.

Oyerinde advised the government especially, the monetary policy authority, to tackle inflation by addressing the issue of imported inflation.

He said with the increase in MPR by 18.5 percent, businesses could be at risk of additional increases in production costs which could lead to higher inflation.

He said, “This could lead to even higher inflation, which CBN is focused on arresting. We, therefore, suggest a revaluation of the CBN’s decision of continuing tightening the monetary space.

“We discouraged further increase in the lending rate, rather we suggest coordination of monetary and fiscal measures that will resonate to stimulate the growth trajectory of the economy.

“Addressing the high energy prices, high cost of transportation, and insecurity that usually lead to a higher cost of production need be addressed to curb inflation.”