Tightening Liquidity in the Financial Market Over Production is the Cause of Inflation — Peter Obi

The vintage Onitsha-based trader and Opposition Leader, Peter Obi has expressed crucial opinionated criticism over the recent decision of the Central Bank of Nigeria on its increased Monetary Policy Rate, MPR, to 22.5% and Cash Reserve Ratio of 45%.

On his official X handle, Obi posited that insecurity and tightening liquidity in the financial system do not improve productivity, that is, food production, which is the primary cause of inflation in Nigeria.

Earlier, West Africa Weekly reported the recent move by Nigeria’s Central Bank Governor, Yemi Cardoso, on the directives to increase the nation’s MPR to 22.5% with a CRR of 45%, a move Obi faulted to worsen the economic situation in Nigerian households further.

Obi however expressed that a 30% increased interest rate on manufacturing sectors, which mostly rely on bank loans and credit facilities will make it difficult to repay, which has the potential to cause increased unemployment.

Tightening liquidity in the financial system does not improve productivity, i.e. food production, which is the major cause of inflation in Nigeria, he stated.

Moreover, in his submission, he stated that the most critical way to manage Nigeria’s high rate of inflation and decline in production is for the government to address the issue of insecurity in the country, which will allow for increased food and crude oil production, and an overall increase in production, which will make products, especially food, cheaper.”

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