The Manufacturers Association of Nigeria, (MAN) has raised concern over the recent increase of the Monetary Policy Rate (MPR) from 11% to 13% by the Central Bank of Nigeria (CBN) at its last Monetary Policy Committee (MPC) meeting.
According to the Director General of MAN, Mr Segun Ajayi Kadir, that disclosed the position of the body, explained that clearly, the increase in MPR has widened the journey farther away from the preferred single digit interest rate regime.
Noting that It is not manufacturing friendly considering the myriad of binding constraints already limiting the performance of the sector. “MAN is therefore concerned about the ripple effects of this decision and its implications for the manufacturing sector that is visibly struggling to survive the numerous strangulating fiscal and monetary policy measures and reforms”.
Although he pointed out that consequently, manufacturers are hopeful that the stringent conditionalities for accessing available development funding windows with the CBN will be relaxed to improve the flow of long-term loans to the manufacturing sector at single digit interest rate.
Adding that the expectation is that MPC will ensure that future adjustments of MPR takes into consideration the trend of core inflation rather than basing decision on headline and food inflation.
This according to Kadir, will no doubt shield the sector of the backlashes from the 13.5% MPR, ramp up production and guarantee sustained growth in the overall best interest of the economy.
the Monetary Policy Committee (MPC) on Tuesday May 24, 2022 reviewed its previous decisions. The Committee decided to deepen its contractionary monetary policy stance by increasing the Monetary Policy Rate (MPR) to 13.5% from11.5%,which was fixed since September 2020.
The key rationale for upscaling the MPR stems from the need to curb the rising rate of inflation that recently peaked at 16.8%, ensure relative stability, sustain economic growth in the face of the high-level uncertainties in the global economy.
The MPC however, retained the asymmetric corridor of +100/-700 basis points around the MPR; Cash Reserve Ratio (CRR) at 27.5% and Liquidity Ratio was also retained at 30%.
