.As CPPE commends apex bank, tasks FG on tackling insecurity
COMFORT EKELEME, Business Editor
The Central Bank of Nigeria (CBN) has, once again, kept its key lending rate, known as the Monetary Policy Rate (MPR), at 27.5 per cent.
The Governor of CBN, Yemi Cardoso, announced the decision on Tuesday in Abuja, following the 301st Monetary Policy Committee (MPC) meeting.
Cardoso said that all 12 MPC members voted unanimously to hold all key monetary parameters.
The committee, thus, retained the cash reserve ratio at 50 per cent for deposit money banks and 16 per cent for merchant banks.
It also retained liquidity ratio at 30 per cent, and the asymmetric corridor was held at +500/-100 basis points around the MPR.
With this decision, the MPC has retained the rates for three consecutive meetings.
.As CPPE commends apex bank, tasks FG on tackling insecurity
Meanwhile, Centre For the Promotion of Private Enterprise (CPPE) has stressed the need for more effective and impactful actions on insecurity in order to scale up food production.
It’s Chief Executive Officer, Dr. Muda Yusuf stated this in a telephone interview with Daily Champion.
Dr. Yusuf who was responding to the decision of the Central Bank of Nigeria (CBN) keep its key lending rate, known as the Monetary Policy Rate (MPR), at 27.5 per cent maintained that Nigerians need to see a lot more effective and impactful action on insecurity, adding that monetary policy instruments alone are not sufficient enough to tackle inflation.
He, however, advised that the CBN and managers of the economy generally should look beyond monetary policy instruments, because it is very clear to us that monetary policy alone cannot tackle inflation.
According to him, Nigeria is in dire need of factors that can bring down cost of production, cost of product distribution, cost of importation of critical inputs for production and distribution across all sectors of the economy.
He said, “Many of us expected the hold in the CBN rates. We expected that, because knowing the mindset of CBN, as long as inflation has not significantly moderated, it is most unlikely that CBN will cut rates.
“Even though the headline inflation accelerated marginally to 22.22 percent. The month on month headline inflation increased, the food inflation also increased. The core inflation increased on month to month, and these were some of the arguments that the CBN referenced in justifying the decision to hold the rates.
“So given that situation and given the fact that we are still contending with other factors driving inflation, like energy cost, insecurity even the exchange rates, cost of funds, cost of logistics, those costs are still there, exacting pressure on the supply side.
“So you take all of these things together, it is no surprise that the CBN did not opt for a relaxation of the monetary policy rates,” he said.
Speaking further, Dr Yusuf stated that from the perspective of the CBN, “I think this is what many of us expected, even though some of us felt that they needed to make cheaper funds available for the economy, for the investors.
The tight monetary situation has also encouraged inflow of forex.
According to him, it is no surprising that the CBN has opted to hold the rates, saying that the implications is that the interest rate in the economy will remain high, at least for now.
He also noted that the returns on investment in many of these financial instruments will remain attractive.
“Those investing in them are likely to smile to the bank. It also has implications for portfolio investment, because high interest rate is good for portfolio inflows.
“The downside is that the pressure on the real sector or investors who have borrowed money, the pressure on them in terms of servicing debt will continue to increase, at least for the next two months until there is possible review,” he said .
Our advice is that CBN, managers of the economy generally should look beyond monetary policy instruments, because it is very clear to us that monetary policy alone cannot tackle inflation, we need factors that can bring down cost of production, cost of product distribution, cost of importation of critical inputs for production and distribution across all sectors of the economy.
CBN on Tuesday again, kept its key lending rate, known as the Monetary Policy Rate (MPR), at 27.5 per cent.
The Governor of CBN, Yemi Cardoso, announced the decision on Tuesday in Abuja, following the 301st Monetary Policy Committee (MPC) meeting.
Cardoso said that all 12 MPC members voted unanimously to hold all key monetary parameters.
The committee, thus, retained the cash reserve ratio at 50 per cent for deposit money banks and 16 per cent for merchant banks.
It also retained liquidity ratio at 30 per cent, and the asymmetric corridor was held at +500/-100 basis points around the MPR.
With this decision, the MPC has retained the rates for three consecutive meetings.
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