Rate hikes ineffective against inflation, LCCI tells CBN

From Abubakar Yunusa Abuja

The Lagos Chamber of Commerce and Industry has called on the Central Bank of Nigeria to explore viable options to tackle the country’s surging inflation as the frequent interest rate hikes were not producing the desired result.
The chamber made this known in a statement signed by its Director-General, Chinyere Almona.
According to the statement, since April 2022, inflation has increased from 16.82 per cent to 21.91 per cent in February 2023, despite a 6.5 per cent increase in the key rate over the same period.
The chamber said it expected the CBN to hold off an increase or at best moderate, the key rate has given the weak relationship between it and inflation, especially after manufacturers and other businesses were groaning under high borrowing costs and the cash crisis.
The statement read in part, “While the CBN has the overarching mandate of ensuring price stability, we suggest it should not be done in a manner that compromises growth, more especially in the face of high unemployment.
“Inflation chips away at purchasing power leads to inventory stockpiles, undermines growth, and creates a lot of economic uncertainties. Taming it, however, should not be done at the expense of growth and the most vulnerable sectors.”
It further said that the instrumentality of monetary policy alone appears insufficient to guarantee the desired results of low, stable, and predictable prices.
The chamber advocated that the structural rigidities around infrastructure and agriculture should be looked into and tackled to rein in inflation.