• Monetary tools are handicapped, address supply rigidity, says don• Stock market performance hinged on MPC outcome
Analysts expect the Committee to assess global growth prospects for the year within the context of rising cases of the Omicron variant amid the ongoing unwinding of monetary stimulus by global central banks. The economist insisted that the “inflation rate was not originally triggered by monetary expansion but supply rigidity and production bottlenecks,” which could be addressed by frontally tackling insecurity and other logistics challenges that increase the cost of transportation.
A professor of applied economics and World Bank consultant, Godwin Owoh, shared the same view with Saibu, arguing that there is a complete breakdown of the monetary transmission mechanism resulting in an unrestrained rise in the three key prices – inflation, exchange and lending rates. The price level makes an impact at the household level. The people in the village are not interested in MPC but the cost of goods in the market. MPC cannot be detached from the realities in the market. People wake up and fix prices without any restraint. Most Ghanaian schools have not increased tuition in the past seven years. But can you say that about Nigeria?”
He said: “The effect of the interest rate hike will be obvious in the economy. This is the time for the allocation of credits to the productive sectors of the economy. Any incentive that will place Nigeria on the food sufficiency table is welcome. Thus, he called for proper coordination between fiscal and monetary authorities, urging them to put in place measures to cushion the adverse impacts of an increase in the interest rate on businesses.
Historically, the MPC has often adopted a reactive stance instead of a proactive stance in responding to the exodus of foreign investments from emerging economies.
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