CPPE Warns CBN: Further Interest Rate Hikes Could Stall Nigeria’s Economic Recovery

The Centre for the Promotion of Private Enterprise (CPPE) has urged the Central Bank of Nigeria (CBN) to tread carefully on further interest rate increases, warning that additional monetary tightening could slow down Nigeria’s fragile economic recovery and place more pressure on businesses already struggling with high costs.

Ahead of the CBN Monetary Policy Committee (MPC) meeting, CPPE CEO Muda Yusuf raised concerns that both global and domestic factors are intensifying inflation risks. He pointed to rising geopolitical tensions involving the United States, Israel, and Iran, which have pushed up crude oil prices and triggered renewed volatility in global energy markets.

According to the organisation, higher oil prices are already feeding into Nigeria’s domestic economy, increasing the cost of fuel, transportation, logistics, and general business operations. CPPE also warned that growing political spending ahead of the 2027 election cycle, along with increased FAAC allocations to states, could worsen liquidity pressures and complicate inflation control efforts.

While acknowledging that the CBN may feel compelled to maintain a tight monetary stance to manage inflation expectations and attract investor confidence, CPPE cautioned that further rate hikes could hurt the real sector. It warned that higher interest rates could reduce access to credit, discourage investment, increase loan defaults, and strain businesses already operating under difficult conditions.

The organisation stressed that Nigeria’s inflation problem is largely driven by supply-side constraints such as energy costs, transport inefficiencies, and weak productivity—not just demand pressure. It therefore called for a more balanced approach, urging policymakers to focus on structural reforms like improved energy security, local refining capacity, and exchange rate stability rather than relying heavily on interest rate increases alone.

source: The cable