Mixed reactions have continued to trail the decision by the Monetary Policy Committee of the Central Bank of Nigeria (CBN) to increase the benchmark interest rate by 1 per cent at their last meeting.
While some economists and financial analysts flayed the increment of the rate, others said it was necessary in view of the present condition of the economy.
At the 248 MPC meeting held Tuesday in Abuja, the MPC also raised the cash reserve requirement (CRR) from 20 to 22.5 per cent.
Mr. Odilim Enwegbara, an Abuja-based economist and analyst said he was completely disappointed with the outcome of the CBN MPC meeting.
He said if the CBN says its decision was based on increasing inflation rate, it “should be informed, if they don’t know that some countries have their inflation rates higher than their key interest rates (central bank rates), especially when the central bank’s MPR is focused on improving the economy.
“The most plausible way to bypass this anti-SMEs, anti-real investment monetary policy of the CBN is by the federal government creating a specialised development bank to function as the provider of cheap loans (single digit loans) to Nigeria’s critical and strategic sectors such as industrial, manufacturing and agricultural/food processing sectors,” Mr Enwegbara noted.
Also commenting, Mr. Manz Denga, a former Managing Director of the Transnational Corporation (Transcorp) and former regional managing director of UBA, East Africa, said an increase in interest rate by CBN means less lending opportunity as the cost of borrowing goes up.
He said “if the bailout funds and CBN agric lending were at 9 per cent interest, I would rather want the CBN reduce the policy rate to match the 9 per cent. This would stimulate lending and economic activities, for the new government.
“The CRR and Liquidity Ratio should similarly be brought down, by proportionate numbers.”
Meanwhile, the Coalition of Civil Society Groups (CCSG) has called on Nigerians to support the current monetary policy implemented by the Central Bank of Nigeria (CBN).
The group said a change that would usher in an everlasting period of prosperity must be gradual and not spontaneous.
The president of the group, Mr. Etuk Bassey Williams, said these during a press conference in Abuja.
Bassey noted that Nigeria was presently going through one of the most difficult periods in her national life owing to several events, such as global oil glut, that have characterised the socio-economic and political landscape of the nation in the past one year.
He stated that the group was very optimistic that the various policies of the present government would help to bring about monetary and price stability in the system.
Source: Daily Trust
