Tony Chukwunyem 
Analysts at CSL Stockbrokers have disagreed with the Central Bank of Nigeria’s (CBN) decision to further increase the benchmark interest rate-Monetary Policy Rate(MPR)- by 50bps to 18.5 percent from 18 percent previously. Commenting on the outcome of the Monetary Policy Committee’s (MPC) meeting on Wednesday, which saw the committee raising the MPR for the seventh consecutive time to 18.5 per cent, the analysts, in a report released yesterday, contended that contrary to the MPC’s view, the continuous rate hikes will not effectively curb inflation and would further negatively affect economic growth.
They said: “In our view, we reiterate that the continuous rate hike will further hamper growth. We expect the hike in MPR rate to continue to have little effect on inflation numbers, as issues relating to the supply factors that continue to pressure inflation numbers remain largely unattended to.” At the end of the MPC meeting, CBN Governor, Mr. Godwin Emefiele, had noted that the MPC’s decision to maintain its tight monetary policy stance was aimed at stemming inflation, given that headline inflation rate increased by 18bps to 22.22 percent in April 2023 from 22.04 per cent in March 2023.
He also pointed out that empirical counter- factual evidence of a ‘do- nothing’ approach by the CBN suggested that inflation would have risen as high as 30.48 per cent in- stead 22.22 percent. However, stressing that they retain their view that the impact of the continuous rate hikes on growth, “appears worse than the impact on reducing inflation,” the CSL Stockbrokers analysts stated that: “ The aggressive rate hikes will likely hamper the country’s growth negatively in the long run while having a minimal effect in combating inflation and attracting foreign inflows.”
