Economy
CPPE Warns CBN Against Further Rate Hikes as MPC Meeting Kicks Off
By Adedapo Adesanya
The Centre for the Promotion of Private Enterprise (CPPE) has urged policymakers to adopt a cautious approach to further interest rate hikes, warning that rising political spending ahead of the 2027 elections and growing geopolitical tensions could complicate monetary policy decisions.
The Monetary Policy Committee (MPC) of the central bank will hold its 305th meeting starting Monday, May 19 (today) to Tuesday, May 20, after which the monetary policy decisions will be announced.
The centre said while inflation control remains critical, excessive monetary tightening could weaken credit growth, discourage private investment and slow Nigeria’s fragile economic recovery.
Last week, the National Bureau of Statistics (NBS) said the country’s inflation increased to 15.69 per cent in April amid the impact of the continued tension in the Middle East.
According to the chief executive of CPPE, Mr Muda Yusuf, the MPC will need to carefully weigh domestic economic realities alongside global developments before taking any decision on rates.
He stated that geopolitical tensions involving the United States, Israel and Iran were already fueling uncertainty in the global energy market, with rising crude oil prices expected to increase domestic energy, logistics and production costs, noting that the global developments could further intensify inflationary pressures within the Nigerian economy.
On the domestic front, Mr Yusuf said signs of rising liquidity linked to preparations for the 2027 general elections are becoming more evident, explaining that political spending by candidates and parties, combined with increasing allocations from the Federation Account Allocation Committee (FAAC) to state governments, could create fresh liquidity management and inflation challenges for monetary authorities.
“Indications of increased liquidity related to the upcoming 2027 elections are becoming more prominent. Political spending from candidates and parties, coupled with enhanced disbursements from FAAC to state governments, presents important considerations for liquidity management and inflation control,” he said.
Mr Yusuf stated that, given the current environment, there is a strong possibility that the MPC may either retain the current policy stance or opt for only moderate tightening.
The CPPE warned that sustained high interest rates could hurt economic growth, weaken industrial productivity and undermine job creation and acknowledged the need to manage inflation expectations
The centre argued that Nigeria’s inflation challenges are largely supply-driven, particularly due to high energy costs, logistics bottlenecks and structural inefficiencies, limiting the effectiveness of aggressive monetary tightening.
According to Mr Yusuf, monetary tightening is generally more effective in tackling demand-pull inflation than supply-side inflation.
He stressed that higher interest rates could increase borrowing costs for businesses, reduce manufacturing competitiveness, constrain small and medium-scale enterprises and discourage investment at a time when the economy requires stronger productivity growth.
The CPPE also warned that elevated rates could heighten the risk of loan defaults and place additional pressure on businesses already struggling with high operating costs.
Mr Yusuf advocated a more balanced and development-focused monetary policy framework suited to the realities of emerging economies like Nigeria, where infrastructure gaps, weak productive capacity, unemployment and financing constraints remain major challenges.
He maintained that sustainable disinflation in Nigeria would depend more on supply-side reforms, energy security, improved logistics, stable exchange rates and increased domestic refining capacity than solely on aggressive monetary tightening.
“The primary focus should be on fostering investor confidence, encouraging productive investments, enhancing output growth and improving the economy’s supply-side capacity while remaining attentive to inflation management,” he said.
By Adedapo Adesanya
The NASD Over-the-Counter (OTC) Securities Exchange closed flat on Wednesday, August 5, as the market witnessed weaker trading activity with only two deals executed.
In the midweek session, the volume of securities exchanged by investors dropped 99.9 per cent to 802 units from the 1.6 million units recorded on Tuesday. The value of securities further decreased by 99.6 per cent to N208,240 from the preceding session’s N47.6 million, and the number of deals significantly went down by 93.9 per cent to two deals from the 33 deals recorded a day earlier.
Great Nigeria Insurance (GNI) Plc remained the most traded stock by value on a year-to-date basis, with 3.4 billion units worth N8.4 billion, followed by Infrastructure Credit Guarantee (Infracredit) Plc with 2.3 billion units sold for N6.5 billion, and Central Securities Clearing System (CSCS) Plc with 76.9 million units transacted for N5.5 billion.
GNI Plc was also the most active stock by volume on a year-to-date basis, with 3.4 billion units exchanged for N8.4 billion, followed by Infracredit Plc with 2.3 billion units traded for N6.5 billion, and Resourcery Plc with 1.1 billion units valued at N415.7 million.
There were no price gainers or losers yesterday.
As a result, the market capitalisation stood unmoving at N2.739 trillion, while the NASD Security Index (NSI) remained unchanged at 4,563.96 points.
By Adedapo Adesanya
The Naira slid against the US Dollar by N2.28 or 0.17 per cent in the Nigerian Autonomous Foreign Exchange Market (NAFEX) on Wednesday, August 5, to N1,363.85/$1 from N1,362.55/$1.
The local currency also declined against the Pound Sterling in the official market during the session by N5.97 to close at N1,837.38/£1 compared with Tuesday’s closing rate of N1,831.41/£1, and against the Euro, it crashed by N6.54 to quote at N1,575.25/€1 versus the preceding session’s N1,568.71/€1.
But at the black market, the Nigerian Naira traded flat against the greenback yesterday at N1,400/$1, and also remained unchanged at the GTBank FX desk at N1,373/$1.
The Central Bank of Nigeria (CBN) says rates have narrowed to below two per cent, while the country’s external reserves have risen above $52.5 billion, reflecting the impact of its ongoing monetary and foreign exchange reforms.
CBN Governor Yemi Cardoso, represented by the Acting Director of Corporate Communications and Investor Relations, Mrs Hakama Sidi-Ali, disclosed this on Tuesday during the CBN Fair in Gombe. He noted that reforms introduced since 2023 had significantly reduced the disparity between the official FX market and the parallel market.
“The Naira continues to strengthen, with the spread between official and Bureau de Change rates now below two per cent,” he said, adding that reserves at $52.5 billion were supported by sustained inflows and renewed investor confidence in the economy.
Interbank FX transactions slid as weaker market activities dropped total Dollar volume exchanged to $75.35 million, a 51.8 per cent decline from $156.23 million in turnover quoted at the previous close.
The deals at the NFEM window also fell as data from the central bank put Wednesday’s quote at 82 from 139.
In the cryptocurrency market, major were down as global risk sentiment softened as a key world equity index slipped and chipmakers fell.
The MSCI All Country World Index snapped a five-day run to fall 0.2 per cent as chipmakers retreated on both sides of the Pacific. South Korea’s Kospi, a bellwether for the AI trade, dropped 4.4 per cent.
Ripple (XRP) depleted by 1.7 per cent to $1.05, Binance Coin (BNB) decreased by 1.0 per cent to $594.87, Cardano (ADA) depreciated by 0.9 per cent to $0.1884, TRON (TRX) shrank by 0.2 per cent to $0.3261, Solana (SOL) crumbled by 0.1 per cent to $74.00, and Dogecoin (DOGE) went down by 0.1 per cent to $0.0697.
On the flip side, Ethereum (ETH) gained 2.3 per cent to trade at $1,911.41, and Bitcoin (BTC) rose by 0.8 per cent to $64,759.28, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) remained unchanged at $1.00 apiece.
By Dipo Olowookere
The domestic stock exchange rebounded by 0.05 per cent on Wednesday on the back of renewed bargain-hunting by investors, though the level of activity waned.
After bleeding for a few days, the Nigerian Exchange (NGX) Limited heaved a sigh of relief yesterday, as the All-Share Index (ASI) gained 109.41 points to close at 244,912.24 points compared with the previous day’s 244,802.83 points, and the market capitalisation garnered N71 billion to settle at N158.087 trillion versus Tuesday’s N158.016 trillion.
Business Post reports that despite the rebound recorded by Customs Street at midweek, the market breadth index remained negative, as there were 20 price advancers and 29 price decliners, implying bearish investor sentiment.
Linkage Assurance appreciated by 9.94 per cent to N1.77, AVA Capital rose by 9.55 per cent to N10.90, Fortis Global Insurance advanced by 7.69 per cent to N2.80, McNichols gained 7.34 per cent to finish at N5.85, and Coronation Insurance surged by 5.51 per cent to N2.49.
Conversely, Honeywell Flour depreciated by 9.94 per cent to N16.30, PZ Cussons gave up 9.94 per cent to trade at N74.75, Zichis crashed by 9.74 per cent to N20.76, Learn Africa slipped by 9.62 per cent to N9.40, and Neimeth tumbled by 8.33 per cent to N8.25.
The busiest equity was FCMB, with a turnover of 369.2 million units valued at N4.1 billion. Chams transacted 46.7 million units worth N201.8 million, First Holdco transacted 43.5 million units for N5.7 billion, Access Holdings sold 29.8 million units worth N778.0 million, and Linkage Assurance exchanged 19.6 million units valued at N33.5 million.
At the close of transactions, market participants bought and sold 824.1 million units worth N25.5 billion in 48,114 deals, in contrast to the 1.6 billion units sold for N28.7 billion in 54,160 deals a day earlier, showing a shortfall in the trading volume, value, and number of deals by 48.49 per cent, 11.15 per cent, and 11.16 per cent, respectively.
