House committee warns Central Bank of Nigeria (CBN) that maintaining high interest rates aimed at curbing inflation may backfire
The House of Representatives Committee on National Planning and Economic Development has cautioned the Central Bank of Nigeria (CBN) against the unintended consequences of maintaining high interest rates aimed at curbing inflation.
Chairman of the Committee, Rep. Gboyega Nasiru (APC-Ogun), issued the caution on Wednesday in Abuja during a meeting with the Statistician-General of the Federation and Chief Executive Officer of the National Bureau of Statistics (NBS), Mr. Adeyemi Adeniran.
Nasiru said the warning was timely as the CBN gears up for its milestone 300th Monetary Policy Committee (MPC) meeting scheduled for early next week.
Parliament Reports recalls that at the 299th MPC meeting held on February 19 and 20, 2025, the apex bank had maintained its tight monetary policy stance, retaining the Monetary Policy Rate (MPR) at 27.5 per cent to rein in inflation.
While acknowledging that the administration of President Bola Tinubu had embarked on bold market-oriented reforms, Rep. Nasiru said there was a broad consensus that these steps were beginning to yield positive outcomes.
He noted: “The policy direction has delivered notable results, with the economy showing signs of stabilisation and investor confidence steadily returning.”
According to him, Nigeria’s capital market had appreciated by nearly 100 per cent over the past two years, while the CBN recorded its highest level of external reserves in more than three years.
He also pointed out that the apex bank recently declared a profit of N38.8 billion a dramatic turnaround from the staggering N1.15 trillion loss it posted in 2023.
Despite these gains, Rep. Nasiru voiced concerns over the ripple effects of continued high interest rates on vital sectors such as manufacturing, agriculture, and Small and Medium Enterprises (SMEs), which are crucial to job creation and economic expansion.
“The Monetary Policy Rate (MPR) has been raised 10 times since January 2023, moving from 16.5 per cent to the current 27.5 per cent in a bid to curb demand-pull inflation,” he said.
“However, it appears the effectiveness of this policy has been undermined by structural bottlenecks and supply chain inefficiencies.”
Nasiru urged the CBN to reassess its approach: “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.”
In his response, the Statistician-General, Mr. Adeniran, presented labour market data from the second quarter of 2024, indicating that the national unemployment rate stood at 4.3 per cent—down from 5.3 per cent in the preceding quarter.
He said unemployment remained higher among women (5.1 per cent) than men (3.4 per cent), and was more prevalent in urban centres (5.2 per cent) compared to rural areas (2.8 per cent).
Adeniran further revealed that young Nigerians faced an unemployment rate of 6.5 per cent, while 12.5 per cent of youth were not engaged in employment, education, or training (NEET). He noted that the NEET rate was particularly high among young females at 14.3 per cent, compared to 10.9 per cent among their male counterparts.
He added that the Bureau was in the process of finalising its reports for the third and fourth quarters of 2024, which would be released to the public soon.
