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Peter Obi criticises MPC’s rate hikes decision, warns of economic consequences

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In a bold critique, Peter Obi, the Presidential Candidate of the Labour Party in the 2023 poll, has expressed deep concern over the recent decisions of the Monetary Policy Committee (MPC) to elevate the Monetary Policy Rate (MPR) to 22.5% and the Cash Reserve Ratio (CRR) to 45%.

Obi, a former governor of Anambra State, voiced his apprehension regarding the potential adverse effects on the already challenging economic landscape faced by many Nigerian households.

In a statement released today via X (formerly Twitter), Obi, drawing upon his extensive trading knowledge and real-sector involvement, argued that the MPC’s decision is likely to worsen the economic situation for Nigerian households.

He particularly highlighted the impact on the productive sector, foreseeing potential job losses in manufacturing and other sectors dependent on bank loans and credit facilities.

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Obi questioned the effectiveness of tightening liquidity in the financial system as a means to improve productivity, especially in food production, a key factor contributing to inflation in Nigeria. He pointed out that a significant portion of the total money in circulation is outside the banking system, making the MPC’s measures potentially counterproductive.

The presidential candidate emphasised the need for alternative measures that stimulate growth and alleviate financial burdens on households. He called for a comprehensive approach to economic management, urging policymakers to address the root causes of the crisis, including insecurity.

Obi contended that resolving security issues would boost food and crude oil production, ultimately increasing overall production and restoring confidence for foreign investments.

In a cautionary note, Obi emphasised the necessity for practical originality and results in managing Nigeria’s economic challenges, dismissing mere tinkering with classical economics as insufficient.

His statement underscores the critical importance of addressing fundamental issues to ensure a sustainable and resilient economic recovery.

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