.Muda Yusuf faults increase, canvasses improved support to devt finance institutions
COMFORT EKELEME, Business Editor
The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) has further raised interest rate by 25 basis points to 27.50 per cent from 27.25 per cent.
The Governor of the CBN and Chairman of the MPC, Yemi Cardoso, announced the raise on Tuesday in Abuja, while presenting a communiqué after the 298th meeting of the committee.
Cardoso, however, announced that the committee also decided to hold all other parameters constant.
The MPC, thus, retained the Cash Reserved Ratio (CRR) at 50 per cent for Deposit Money Banks (DMBs) and 16 per cent for merchant banks, retained the Liquidity Ratio at 30 per cent, and also retained the Assymetric Corridor at +500/-100 basis points around the MPR.
Cardoso said that the decisions were unanimously adopted by all 12 members of the MPC who were present at the meeting.
The Tuesday’s decision is the sixth consecutive tightening of the MPR since Cardoso assumed office as CBN governor.
The first decision under Cardoso was an aggressive hike in the MPR by 400 basis points from 18.75 per cent to 22.75 per cent in February.
In March, the committee, again, increased the MPR by 200 basis points to 24.75 per cent, followed by subsequent hikes to 26.25 in May, 26.75 per cent in July, and 27.25 basis points in September.
Cardoso has, thus, raised the MPR by 875 basis points since he assumed office.
These decisions are aimed at combating inflation, stabilising the economy, and promoting economic growth.
Meanwhile, Managing Director/Chief Executive Officer, Centre for the Promotion of Private Enterprise (CPPE), Dr Muda Yusuf has frowned at the decision of the Monetary Policy Committee (MPC) raise interest rate by 25 basis points.
Dr. Yusuf, in a statement made available to Daily Champion said it is troubling that despite the declining growth performance of many critical sectors of the economy as evidenced in the third quarter Gross Domestic Product (GDP) report, the MPC still continued its tightening stance.
He said, in the meantime, “We urge the Central Bank of Nigeria (CBN) to upscale its support for development finance institutions to make up for the financing challenges created by the sustained tight monetary policy regime.
“The GDP sectoral performance report also revealed a glaring disconnect between the the financial services sector and the real economy.
“The financial services sector recorded a growth of 32 per cent, while agriculture and manufacturing grew by 1.14per cent and 0.92per cent,” he said.
According to him, this hawkish disposition would deepen this distortions.
Speaking further,he said meanwhile strategic economic sectors such as agriculture and manufacturing and real estate recorded declines in growth in the third quarter.
He said, air transport and textile remained in recession, stressing that these sectors need monetary and fiscal support, not a further tightening of monetary conditions.
