…urges CBN to maintain tight monetary policy to ensure stability
Muhammad Sanusi, a former governor of the Central Bank of Nigeria (CBN) has cautioned against loosening of monetary policy, warning that a reduction in interest rates at this time could jeopardise economic stability and reverse recent gains in the fight against inflation.
Speaking during a plenary session at the ongoing Nigeria Economic Summit on Tuesday, Sanusi described the recent reduction in Monetary Policy Rate to 27% by the Central Bank of Nigeria (CBN) as premature and send wrong signals. He urged the apex bank to maintain a tight monetary policy to ensure economic stability.
“Yesterday, I heard a few things at this summit that disturbed me a bit. One of the things I didn’t like was this aspect that we need to have interest rates come down.
“When the MPC reduced MPR, I called members and said, as far as I am concerned, it was premature. I think it would be a very dangerous thing at this time for this summit to send a signal that we should loosen money. We do not need to send that signal now. So let us encourage the central bank to hold the line,” he urged.
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The former CBN governor warned that any loosening of monetary policy at this point could reverse the gains the country has achieved in exchange rate stability, inflation control, and reserve accumulation.
“Stability is fundamental in money. Without it, we can’t have growth. Without it, we can’t have development. We created a central bank for stable exchange rates, for building our reserves, for stability and bringing inflation down. The only way to achieve this was by tightening money and raising interest rates,” he stressed.
Sanusi further noted that the Nigerian economy had shown promising signs, growing by 3% in the first quarter and 4% in the second quarter of 2025, which accoridng to him surpases population growth for the first time in several years.
“This is the first time in what, eight years that this economy is growing faster than the population. That’s amazing”, Sanusi said, but warned against complacency.
“So it’s fantastic. But it’s not the time to blink. It’s not the time to walk back,” he added.
Sanusi also said curbing inflation remains one of beat approaches in uplifting the poor.