The Lagos Chamber of Commerce and Industry has warned the Central Bank of Nigeria (CBN) to look beyond rate hikes in its bid to tackle the surging inflation that is plaguing the nation’s economy.
The Chamber said this in a statement titled ‘LCCI on CBN’s interest rate increase,’ where it called on the apex bank to look into issues like foreign exchange scarcity, insecurity, rising costs of fuels, and weak infrastructural support for production.
According to the chamber, the economy could suffer from massive capital flight with a negative effect on the naira exchange rate.
It urged the CBN to maintain its targeted intervention schemes for agriculture, manufacturing/industries, energy, infrastructure, healthcare, exports, and MSMEs (micro, small, medium and small-scale enterprises) and other real sectors of the economy.
The statement read in part :“The Monetary Policy Committee of the Central Bank of Nigeria, at its third meeting this year, raised the MPR from 13 per cent to 14 per cent in response to the surging inflation rate that hedged up to 18.60 percent as of June 2022. We note the gloomy outlook of the global economy which has a direct link to our domestic economy with pass through effects of imports.
“The persistent war in Ukraine and other disruptive factors may present as risks into the end of the year. A tightening of rates may have been a good decision by the MPC as that was necessary to tame the rising inflation rates in the past months. We however reiterate our earlier position that rate hikes or monetary policy instruments alone will not yield the desired result of lowering inflation rate without a corresponding boost to the supply-side factors like FOREX scarcity, insecurity, rising costs of fuels, and weak infrastructural support for production.”
The statement further said that beyond the goal of stabilising prices, employment, economic growth, and balance of payment equilibrium were equally important.
“While it is expedient to curb inflation rates, we equally risk a contracted economy that may go towards a recession. This calls for the need to embark on targeted financing for critical sectors of the economy to help boost the supply-side,” the statement added.