In less than three months after it had raised the country’s interest rate to a double-digit, 15.5 percent, the Monetary Policy Committee of the Central Bank of Nigeria again on Tuesday raised the benchmark for lending to 16.5 percent as a bullish move to tackle inflation.
Announcing the committee’s decision at the end of its two-day meeting on Tuesday, the CBN Governor, Mr Godwin Emefiele, said the MPC also decided to hold all other parameters constant. “As regards whether to hold, the MPC was of the view that doing that close to December festive season and expected heavy spending during the 2023 general election would jeopardise the gains of previous policy rates tightening.He added that the MPC decided to continue tightening at a somewhat moderated rate.“The option to loosen was not considered as this will greatly undermine the gains of the three previous decisions,” he said.
Emefiele claimed that the effort is aimed at curbing the inflation rate, which he partly blamed on the higher-denominated naira notes. Gbolade, reacting to the CBN latest interest rate increase to 16.5 percent, made this disclosure in a chat with DAILY POST. “In fairness to the CBN, these measures are supposed to tame inflation and cause the economy to bounce back, but these policies alone cannot cause the needed change looking at political activities that are unfolding and this present government might not be able to do much before handover in 2023,” he stated.
A Professor of Economics at the Olabisi Onabanjo University, Ago-Iwoye, Ogun, Sheriffdeen Tella, who didn’t see the increase coming, said the higher rate would compound inflation.“Government should reduce its expenditure and CBN should stop lending to the government. The exchange rate should further appreciate – those are the solutions,” he said.
He emphasised that the Apex bank must ensure stability in the economy before introducing new guidelines and involvement of stakeholders is necessary too. Enhindero appealed to the CBN to engage the public rigorously in enlightenment, especially on the issue of currency redesign for a better approach amidst the MPC policies implementation.A don of Accounting and Financial Development at Lead City University, Ibadan, Prof. Godwin Oyedokun, said investors, borrowers, and pensioners would suffer from the policy.
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