The Federal Government, through the policy-setting committee of the Central Bank of Nigeria (CBN) has raised the monetary policy rate (MPR), which measures interest rate, from 17.5 %t to 18%.
CBN Governor, Godwin Emefiele disclosed this while reading the communiqué of the second MPC meeting of the year in Abuja on Tuesday.
Addressing journalists at the end of the two-day meeting, Emefiele, said the Committee voted to keep the asymmetric corridor at +100 and -500 basis points around the MPR.
The governor stated the slight increase is to mitigate the effect of inflation and other economic issues.
The MPR has been on the rise since April 2022, when it was 11.50%.
The rate impacts lending and inflation rates, and, when jacked up, consequently affects upward movement of prices of goods and services.
He said: “The MPC committee voted to raise the MPR by 50 basis point to 18%, retain asymmetric corridor at +100 and -500 basis points around the MPR.”
The Punch newspaper however reports that economists are of the opinion that the increase was needless at a time the country was battling with the effects of the naira redesign policy.
It quotes a professor of Economics at the Olabisi Onabanjo University, Sheriffdeen Tella, as saying: “The rake hike is unnecessary. Who is even borrowing from the banks? Can the banks lend anybody money when they don’t have money? The MPR is supposed to be a signal to the banks; if they increase MPR, the central bank is saying, ‘charge more for loans.’ The loans are not even there. It is when the banks receive money that they can create money to give as loans.”
Also, a professor of International Economic Relations at Covenant University, Ota, Jonathan Aremu, said that the CBN would be putting the cart before the horse by deliberating on the Monetary Policy Rate without addressing the naira crisis that has exacerbated the inflation problem in the country.
Aremu, who was an Assistant Head of Research at the CBN lamented that the economy was suffering from serious contraction due to the cash shortage that has constrained production activities.
He said: “The simple quantity theory of money actually explains the basis for inflation, that if so much money is available and there is less goods, the prices will rise, but the money is not available to even produce the goods.”
