Bola Ahmed Tinubu, presidential candidate of All Progressives Congress (APC), says raising interest rates is not the solution to inflation.
The Central Bank of Nigeria (CBN) had raised the interest rate owing to rising inflation which rose in August to 20.52 percent from 19.64 percent in the previous month — the highest in 17 years.
In his manifesto tagged, “Renewed Hope”, Tinubu said the current inflationary trend is caused essentially by global supply disruptions, adding that addressing it should not be by increasing the interest rates.
“To impose the usual anti-inflation medicine of higher interest rates and tighter money-supply will only weaken the patient,” Tinubu said.
“The current surge of inflation is essentially driven by global supply and production disruptions beyond the control of any one government, including Nigeria’s. This is supply-driven inflation, not inflation caused by excess demand in an overheated economy.
“To impose the usual anti-inflation medicine of higher interest rates and tighter money-supply will only weaken the patient. The answer to supply-driven inflation is not to suppress normal aggregate demand levels.
“The better solution is to find ways to increase production and supply. To suppress demand will result in the overall loss of economic activity and jobs. Worse, since the inflation is grounded in supply side issues, placing this weight on the demand side will do little to answer the root causes of current inflation. In short, we punish the national economy and the people without deriving any meaningful benefit.”