The President of the Capital Market Academics of Nigeria, Prof Uche Uwaleke, has urged the Central Bank of Nigeria to gradually reduce interest rates and revive development finance through specialised institutions, warning that persistently high borrowing costs are hurting investment, business expansion and job creation.
Uwaleke made the call on Monday in Abuja during a world press conference organised by CMAN, arguing that Nigeria’s inflation had become increasingly structural and could no longer be effectively tackled through repeated increases in interest rates alone.
He said, “CMAN respectfully advises that, as inflationary pressures become increasingly structural and cost-push in nature, monetary policy should gradually rely less on repeated increases in the Monetary Policy Rate as the primary instrument for controlling inflation. Excessively high interest rates, while helping to moderate aggregate demand, also increase the cost of borrowing, discourage productive investment and constrain business expansion.
“We therefore encourage a gradual moderation of the interest rate environment as inflation expectations continue to improve. This should, of course, be undertaken cautiously and supported by complementary fiscal measures aimed at addressing supply-side bottlenecks.”
