The Monetary Policy Committee, MPC, of the Central Bank of Nigeria, CBN, has raised the benchmark interest rate to 24.75 percent.
According to a communique issued on Tuesday by the CBN governor, Yemi Cardoso, after the MPC meeting in Abuja, the new interest rate is a hike from the 22.75 percent announced by the MPC about a month ago.
Meanwhile, some financial experts had earlier expressed different views on the outcome of the Monetary Policy Committee of the CBN, citing various economic factors.
Okechukwu Unegbu, former President, Chattered Institute of Bankers of Nigeria, CIBN, told the News Agency of Nigeria on Monday in Abuja that the MPC should retain all the rates.
Mr Unegbu said that this would give enough time for the economy to feel the positive impact of the policy rates.
“You can see that the Naira has been doing well since the last MPC meeting. The MPC should hold all existing rates constant till its next meeting.
“The government should also look inwards and ensure that we consume more of what we produce.
“This will help curb unnecessary demand for the dollar and further strengthen the Naira, ” he said.
The Director, Institute of Capital Market Studies at the Nassarawa State University, Keffi, Prof. Uche Uwaleke said that inflationary pressure had persisted despite moderation in exchange rate.
According to Uwaleke, headline inflation has remained stubbornly elevated, climbing above 30 per cent, way ahead of the CBN’s target of 21.4 per cent for 2024.
“Given the signals coming from its governor and the inflation targeting stance of the CBN, another round of tightening via the MPR should be expected in March by at least 100 basis point.
“My personal view, however, is that the MPC should pause for now to see how the jumbo rate hike carried out in February transmits through the economy,” he said.
An economist and Managing Director of Dignity Finance and Investment Ltd., Dr Chijioke Ekechukwu, said that the impact that might be seen to be achieved obviously did not come from rates tightening alone.
According to Ekechukwu, a lot came from an increase in foreign currency supply.
“We therefore need to isolate the impact of the recent tightening in order to determine whether to tighten more or retain.
“We also need to determine the impact of the other factors on the exchange rate and inflation rate,’ he said.
Yet, another economist and Chief Executive Officer of Economic Associates, Dr. Ayo Teriba, had stated that one of the issues Nigerians had had to be contending with is inflation.
He, however, added that the country’s inflation is the cost-push type, which cannot be remedied by Monetary Policy manipulations.
The News Agency of Nigeria (NAN) reports that the committee started its meeting on Monday and to end Tuesday, March 26.
At its last meeting in February, the MPC had raised the Monetary Policy Rate (MPR) by 400- basis points to 22.75 per cent from 18.75 per cent.
The MPR is the benchmark interest rate upon which other rates are determined.
The committee also raised the Cash Reserve Ratio (CRR) to 45 per cent from 32.5 per cent and retained the Liquidity Ratio at 30 per cent, and the Asymmetric Corridor at +100/-700 basis points around the MPR.
NAN
