The Centre for the Promotion of Private Enterprise (CPPE) has described the Central Bank of Nigeria’s (CBN) decision to retain all monetary policy parameters as appropriate, given prevailing global economic uncertainties.
The Chief Executive Officer of CPPE, Dr Muda Yusuf, said this in an interview with newsmen on Tuesday while reacting to the outcome of the 306th meeting of the Monetary Policy Committee (MPC).
The MPC retained the Monetary Policy Rate (MPR) at 26.50 per cent and left all other monetary policy parameters unchanged.
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Yusuf said the decision was appropriate in view of rising global uncertainties and heightened inflationary risks, particularly those arising from geopolitical tensions in the Middle East.
According to him, the renewed tensions could drive up global energy prices, further worsening inflationary pressures and making it difficult for the CBN to ease monetary policy at this time.
“The global situation is very dicey. You can see the level at which oil prices are and the implications for inflation. To the extent that we still have a crisis in the Middle East, it will not be easy to ease or relax interest rates,” he said.
Yusuf said the apex bank was right to adopt a cautious approach amid uncertainties in the global economy and concerns over the inflation outlook.
He noted that rising energy prices remained a major inflationary risk, deciding to maintain the existing monetary policy settings was understandable.
“The Central Bank is being cautious at this time because there are still a lot of uncertainties in the global economy. The inflationary outlook is not looking so good, especially because energy prices are rising. So, it is understandable that the CBN has held the rate,” he said.
Asked whether the decision was commendable, Yusuf said it was more appropriate to describe it as expected, given the prevailing geopolitical situation.
“I will not use the word commendable. It is expected, given the prevailing geopolitical situation,” he said.
Yusuf’s comments suggest that while the decision may not necessarily be viewed as a major policy achievement, maintaining the current interest rate and other monetary policy parameters was a prudent response to the uncertain global economic environment.
