27 May Manufacturers decry CBN rate hike, Say it threatens real sector’s recovery
The Manufacturing Association of Nigeria (MAN) has said the interest rate hike by the Central Bank of Nigeria will reduce the pace of full recovery of the real sector, making manufacturing sector performance to remain lackluster.
The Monetary Policy Committee, on Tuesday, increased the monetary policy rate to 13 percent from 11.5 percent.
MAN in a statement on Thursday said that the rate hike would lead to another level of increase in interest rates on loanable funds, which would upscale the intensity of the crowding out effect on the private sector businesses as firms have lesser access to funds in the credit market.
“It will also lead to rising cost of manufacturing inputs, which will naturally translate to higher prices of goods, low sales and enormous volume of inventory of unsold products,” it said.
The association said the rate hike would spur upward review of existing lending rates dependent on obligations of manufacturing concerns, which will drive up costs.
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