JUST IN: Monetary policy rate hike may trigger recession, LCCI warns

The Lagos Chamber of Commerce and Industry (LCCI) has warned that the decision by the Monetary Policy Committee of the Central Bank of Nigeria (CBN) to increase the Monetary Policy Rate (MPR) may trigger economic recession.

Director General, LCCI, Dr. Chinyere Almona, stated this in a statement made available to Vanguard yesterday.

Recall that the apex bank’s MPC on Tuesday announced its decision to raise the MPR by 150 basis points from 14 percent to 15.5 percent, presumably to curb inflation.

Almona, however, stated: “LCCI is hereby expressing mixed concerns about this decision as aggressive policy rate hikes in response to increasing inflationary pressures may further weaken growth, trigger possible economic recession, worsen public and corporate debt situation and lead to a string of financial crises.

“Further, the increase in policy rate may put pressure on businesses with effect on rising operating costs, therefore leading to workers layoffs and low productivity.”

The chamber advised that urgent action should focus on boosting oil production and ensure better coordination of fiscal policies as alternative measures.

She noted that LCCI has consistently advocated for a more friendly policy/business environment that will attract both foreign and domestic investment and improve productivity (particularly domestic food production).

“Also, policy should focus on addressing multiple exchange rate, improving power supply, tackle worsening insecurity, and incentivize alternative energy sources,” she added.