NewStats: 3,265,222 , 8,186,068 topics. Date: Friday, 13 June 2025 at 11:09 PM i3w6q

Taiwo Oyedele, Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, has presented a compelling counterargument against the prevailing narrative that increasing the Monetary Policy Rate (MPR) is a necessary measure to curb inflation.
According to Oyedele, the Central Bank of Nigeria’s MPR hikes last year fueled inflation, worsening the economic woes of Nigerians.

Speaking recently at a forum organised by PwC and BusinessDay, Oyedele outlined how structural issues in Nigeria’s economy, compounded by policy missteps, are undermining efforts to stabilise prices. “The MPR, as far as I’m concerned, was a factor pushing inflation up, not bringing it down,” Oyedele asserted. He explained that businesses, struggling under exorbitant borrowing costs of 35-40%, are forced to recover these expenses through higher prices, thereby stoking inflation further.
The situation is worsened by Nigeria’s undervalued currency, a point Oyedele ionately emphasised. “I do not think that N1,500/$ is the fair value of the naira. I think the naira is undervalued,” he said, arguing for a focus on recovery and stabilisation of the exchange rate. Oyedele noted that enhanced transparency in foreign exchange markets, coupled with structural reforms, could significantly reduce pressure on the naira, improving its liquidity and value.

Further complicating matters, manufacturers in Nigeria are struggling with over N1 trillion worth of unsold inventories, a direct result of high interest rates and low consumer purchasing power. Oyedele called for a shift away from blanket MPR adjustments and towards policies that address the root causes of inflation, such as FX volatility, inefficient taxation systems, and the lack of for local production.
Despite the challenges, Oyedele remains optimistic about the future, predicting that inflationary pressures will ease in 2025 due to fewer external shocks. However, he emphasised the need for fiscal discipline and transparency, particularly in government spending. “If government spending is from sustainable sources like taxes or resource revenues and not from printing new money, the impact on inflation is muted,” he explained, drawing comparisons with Nordic countries known for their robust economies.

The undervaluation of the naira and the reliance on MPR hikes illustrate a deeper issue in Nigeria’s economic strategy. Oyedele’s insights highlight the urgent need for a paradigm shift in monetary and fiscal policies, prioritizing structural reforms and a sustainable approach to growth.

As Nigeria stands at a crossroads, will policymakers seize the opportunity to implement meaningful changes, or will the economy remain trapped in a cycle of inflationary pressures and undervaluation? The answers will shape the nation’s economic trajectory in the years to come.

https://businessday.ng/business-economy/article/hike-in-mpr-is-stoking-inflation-instead-of-dousing-it-taiwo-oyedele/

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“If government spending is from sustainable sources like taxes or resource revenues and not from printing new money, the impact on inflation is muted,” he explained,

“I do not think that N1,500/$ is the fair value of the naira. I think the naira is undervalued,”

Unfortunately, thinking does not determine fair value. The market determines it, and have said about ₦1,500/$ is fair value.

As for high interest rates creating inflation, that's a chicken and egg thing, as it could equally be said that high inflation creates a need for high interest rates, as money depreciates fast otherwise and would cause capital flight instead of inflows.

Seems Mr Oyedele is job hunting and he's in favour of picking on the thinnest broom from the bunch.

It seems he's still interested in securing a tangible and sustainable portion of a meal o' corn since the Committee gig seems to have run its course as far as such meals are concerned.

If not, why would anyone blame interest rates for the high inflation when basic economics tells us that high interest rates is a desirable tool to curb inflation and even the US Fed and other such institutions in the West employed such measures to fight inflationary pressure.

Mr Oyedele sounds much more like a socialist apologist than a liberal policymaker with this intervention. He basically attacked two fundamental policies of the present CBN. The naira devaluation and MPR rates.

Let's hope he genuinely has a solution and not just looking to make the room uncomfortable for the present occupier of the seat who has been fortunate enough to slide under the radar while the main govt propaganda machinery have had to take on the job of explaining away inflationary and currency exchange value, twin calamities which seem to have compounded the subsidy removal woes.

If the tax expert is really serious about keeping his seat on the table, he should the hallelujah boys to amplify the gains of the subsidy removal and the easy low hanging cob is the increase in revenue never bother what the true value of that increase represents.

Like toy soldiers, he should learn to march to the music from the box instead of looking to start his own music else he be mistaken for an enemy and take some unwanted fire!!

Is it not your Boss that is responsible for the high interest rate and high inflation rates in the first place? Please...

USA is dropping interest rates to reduce inflation. Nigeria keeps increasing interest rates to reduce inflation, but inflation keeps inflating.

Really

Oga I don't know which school you went to
Interest rate are caused by inflation not the other way round

This economic team tinubu have assembled seem to be the worse ever

Blame us for allowing such type of government in office. The annoying part is; come 2027, some people will collect 3 spaghetti and N10,000 to steal ballot box in their favour

Ojuntana:
Seems Mr Oyedele is job hunting and he's in favour of picking on the thinnest broom from the bunch.

If not, why would anyone blame interest rates for the high inflation when basic economics tells us that high interest rates is a desirable tool to curb inflation and even the US Fed and other such institutions in the West employed such measures to fight inflationary pressure.

The problem with you ronu people is that you are arrogantly illiterate. How can you say USA increased MPR to cut inflation? Both USA, UK & Canada have been cutting interest rate to reduce inflation since begining of 2024. The cbn governor is as intelligent as you. Dumb as governor

Lol...

Are these guys serious?

No policy coordination and alignment. No wonder the economy is in shambles.

Everyone is there based on personal and/or corrupt affiliation to bat rather than competence and ability.

TINUNOMICS IS STOCKING HYPERINFLATION AND NIGERIA IS SHOCKING FAST.

Steep 800 percent increase in energy cost is responsible for the inflation not the the high interest rate , infact as an ant Oyeldele knows that the high interest rates rae activated to try to mitigate inflation

Don't worry, they are teaching Peter Obi and OBIDIENTS a hard lesson.

Moreover Tinubu, a master strategist is on the throne. He knows what to do.

This is the first person to make meaning of his education. Not the Cardoso economics

mrvitalis:
Oga I don't know which school you went to
Interest rate are caused by inflation not the other way round

This economic team tinubu have assembled seem to be the worse ever

[color=#006600][/color]
Pls I don't understand your assertion that increase interest rate decrease inflation coz I don't think I can borrow as high as 35% from bank without expecting a returns of minimum of 80% to cover my finance cost, running cost and also maximise profit.This notion of increasing interest rate to curb inflation is a paper thing. Even US is considering lowering of interest rate which is even single digit to reduce inflation.

SalamRushdie:
Steep 800 percent increase in energy cost is responsible for the inflation not the the high interest rate , infact as an ant Oyeldele knows that the high interest rates rae activated to try to mitigate inflation

[color=#006600][/color]
those energy companies are affected by high interest rate which will form part of their cost before determining their pricing. You can imagine dangote borrowing at 36% to do business and you expect him to sell fuel N500 per litre which is impossible coz he most maximize his cost too.

Ojuntana:
Seems Mr Oyedele is job hunting and he's in favour of picking on the thinnest broom from the bunch.

It seems he's still interested in securing a tangible and sustainable portion of a meal o' corn since the Committee gig seems to have run its course as far as such meals are concerned.

If not, why would anyone blame interest rates for the high inflation when basic economics tells us that high interest rates is a desirable tool to curb inflation and even the US Fed and other such institutions in the West employed such measures to fight inflationary pressure.

Mr Oyedele sounds much more like a socialist apologist than a liberal policymaker with this intervention. He basically attacked two fundamental policies of the present CBN. The naira devaluation and MPR rates.

Let's hope he genuinely has a solution and not just looking to make the room uncomfortable for the present occupier of the seat who has been fortunate enough to slide under the radar while the main govt propaganda machinery have had to take on the job of explaining away inflationary and currency exchange value, twin calamities which seem to have compounded the subsidy removal woes.

If the tax expert is really serious about keeping his seat on the table, he should the hallelujah boys to amplify the gains of the subsidy removal and the easy low hanging cob is the increase in revenue never bother what the true value of that increase represents.

Like toy soldiers, he should learn to march to the music from the box instead of looking to start his own music else he be mistaken for an enemy and take some unwanted fire!!

Basic economics does not seldom work in Nigeria context

If you like increase the interest rate to 100%, it will NOT curb Nigerias inflation, and contrary to your advocated basic economics the inflation rate will go higher. Why, because we are greedy people, basic economics formulated in western climes are NOT totally applicable here.

Kiss the truth

I back then in school, I once wrote an article sharing this same sentiment of reducing the MPR as that will bring interest rate down. Businesses paying interest on loan at 35/40% isn't good for the Nigerian economy, it means my #100 investment must give me #100+interest at 40% +costs+profit, almost 80% increase, that would definitely cause inflation

Taiwo Oyedele makes a compelling argument that addresses the root causes of Nigeria’s economic challenges rather than relying on surface-level fixes like MPR hikes. His point about the unintended consequences of high interest rates fueling inflation, rather than curbing it, is particularly valid in Nigeria’s context. Businesses ing on the burden of higher borrowing costs to consumers is a clear example of how structural issues—like FX instability, inadequate local production , and an overreliance on monetary tools—undermine economic growth.

Moreover, his emphasis on fiscal discipline, exchange rate transparency, and structural reforms is crucial for long-term stability. Simply increasing interest rates without tackling systemic inefficiencies and the undervaluation of the naira only creates more economic distortions. I agree with his call for a shift from blanket monetary policy adjustments to targeted reforms that address these deeper challenges.

The proposed tax reform bill presents a seminal opportunity to address Nigeria's perennial inflationary pressures. As the economic linchpin of Nigeria and the most productive state in West Africa, Lagos necessitates substantial investments to augment its production capacity, thereby mitigating inflation.

The current macroeconomic landscape underscores the imperative of recalibrating Nigeria's fiscal architecture. The prevailing Value-Added Tax (VAT) revenue sharing framework, which distributes proceeds to states regardless of their economic viability or security situation, has inadvertently been perpetuating inflation. This is particularly pertinent in states beset by terrorism, where the efficacious allocation of resources is compromised.

Lagos, with its established infrastructure and entrepreneurial ecosystem, is poised for accelerated growth with targeted investments. Increasing manufactured goods in Nigeria would help reduce inflation, as domestically produced goods would diminish reliance on imported commodities. This, in turn, would decrease agricultural produce shortages, as the increased availability of manufactured goods would encourage more people to engage in farming, particularly as mechanized farming becomes more viable.

Furthermore, the concentration of economic activity in Lagos underscores the need for a more nuanced approach to taxation. A tax reform bill that prioritizes investments in Lagos' production capacity would have a multiplier effect on the national economy, stimulating economic growth, and reducing inflation.

In conclusion, a well-structured tax reform bill, coupled with strategic investments in Lagos' production capacity, can potentially curb inflation and stimulate economic growth in Nigeria. It is imperative that our lawmakers consider and prioritize ing the tax reform bill into law and recognize its transformative potential in addressing Nigeria's economic challenges.

This man self get too much knowledge!

He should get a bigger portfolio soon!

1. Raising interest rates alone does not solve Nigeria’s inflation problem
• In developed economies, inflation is often demand-driven, so raising interest rates reduces excessive spending.
• But Nigeria’s inflation is more cost-driven (high costs of borrowing, production, and FX instability).
2. Structural reforms are the real solution
• High interest rates cannot fix problems like inconsistent FX policies, excessive reliance on imports, poor infrastructure, and weak local production.
• Lowering MPR alone won’t fix the economy either, but combining it with structural reforms will.
3. Currency stability is key to inflation control
• A stable and fairly valued naira would reduce import costs and bring inflation under control.
• This requires FX market transparency, increased non-oil exports, and foreign investment.

Where I Would Modify Oyedele’s Argument
1. Interest Rates Should Still Be Used But Moderately
• While high interest rates hurt businesses, completely abandoning MPR as a tool would be a mistake.
• A more balanced approach (e.g., moderate rate cuts alongside structural reforms) would work better.
2. Government Spending Must Be Controlled Aggressively
• Nigeria’s debt servicing is eating up revenues. If fiscal discipline is not enforced, inflation will remain high.
• Cutting wasteful government spending and improving tax efficiency would help.

CBN will say it is reducing it according to their white man's textbooks.

yinchar:


Basic economics does not seldom work in Nigeria context

If you like increase the interest rate to 100%, it will NOT curb Nigerias inflation, and contrary to your advocated basic economics the inflation rate will go higher. Why, because we are greedy people, basic economics formulated in western climes are NOT totally applicable here.

Kiss the truth

It seems you're unaware that the basic principle on which capitalism is founded on greed.
So your criticism of greed as the reason economic theories do not work in Nigeria is off the mark
There's none greedier than the West
Perhaps those whom you defend are just incompetent in applying the theories

teejoyz:

[color=#006600][/color]
Pls I don't understand your assertion that increase interest rate decrease inflation coz I don't think I can borrow as high as 35% from bank without expecting a returns of minimum of 80% to cover my finance cost, running cost and also maximise profit.This notion of increasing interest rate to curb inflation is a paper thing. Even US is considering lowering of interest rate which is even single digit to reduce inflation.

Read what I wrote again this time slowly

43Ronin:

The problem with you ronu people is that you are arrogantly illiterate. How can you say USA increased MPR to cut inflation? Both USA, UK & Canada have been cutting interest rate to reduce inflation since begining of 2024. The cbn governor is as intelligent as you. Dumb as governor

Ok... How do you arrive at the claim that I'm ronu? It makes you seem empty to have to attach a label on me before you can present your opinion in a bid to ridicule mine
If you did your research back a little bit you'll find that the Fed just started cutting interest rates when they felt inflation was dropping. Powell insisted on holding it high much to the chagrin of Biden all through the while that inflation was thriving.
Show some intelligence man

Despite how apt the man was in breaking the situation down, see the rubbish people are writing on top and degrading this solid topic to ethnic rubbish.

SalamRushdie:
Steep 800 percent increase in energy cost is responsible for the inflation not the the high interest rate , infact as an ant Oyeldele knows that the high interest rates rae activated to try to mitigate inflation

Is anyone of these economists we have in power as sound as those in the USA and UK?

Our bolekaja economists believe that interest rates must be increased to reduce inflation, they have done this at least twice in this current istration, yet inflation keeps ballooning.

USA and UK on the other hand had been cutting interest rates to drive inflation further down.

budaatum:


Unfortunately, thinking does not determine fair value. The market determines it, and have said about ₦1,500/$ is fair value.

As for high interest rates creating inflation, that's a chicken and egg thing, as it could equally be said that high inflation creates a need for high interest rates, as money depreciates fast otherwise and would cause capital flight instead of inflows.

Inflation has already eased up in the north which means the policies are working.

I thought that oyedele is that bright. He's just regular so-called experts with loads of theories that they think they explain everything.

These policies takes time to manifest. Bag of Rice is now 80k down from 95k within the space of 3 month