Some economists and financial experts have attributed the retention of the Monetary Policy Ratio (MPR) at 13.5% by the Central Bank of Nigeria (CBN) to late budget cycles and upward pressure imposed on food prices across the country.
The experts, on Friday, explained that it would have been a step in the wrong direction if the apex bank had decided otherwise.
The Governor, CBN, Godwin Emefiele, had announced that its Monetary Policy Committee decided to retain the benchmark interest rate at 13.5%, the Cash Reserve Ratio (CRR) at 22.5% and the liquidity ratio at 30%.
Also, the Asymmetric window was left at +200 and -500 basis points around the MPR.
Chief Executive Officer, Financial Derivatives, Bismark Rewane, explained that holding the MPR at 13.5% was prudent and in the right direction, considering the global and domestic risks, debt profile of the nation.
Rewane said, “CBN’s move was not unexpected as it ignored the recent increase in the price of crude oil due to the recent happenings in Saudi Arabia. I believe it is a prudent move needed at this challenging period.”
Another economist, Dr. Sola Owoeye, explained that early passage of the budget and improved key fundamentals of the economy would aid a rate cut.
He said that the economy was yearning for a rate cut to stimulate its productive sector and allow for the expansion of Small and Medium Enterprises.
The President, Association of Bureaux Des Change Operators of Nigeria (ABCON), Aminu Gwadabe, said that rate retention was a momentary response to the security challenges in the nation.
Gwadabe said that the apex bank was very cautious in its decision, considering the uncertainties in the nations’ fiscal policy arising from the late passage of the budget and recent hike in food prices.
“A rate cut would bring the needed stimulus in the economy in order to revive the fortunes of the manufacturing sector. CBN should tackle the challenges of prevailing exchange rates in the market in order to sustain the gains recorded at the foreign exchange market.”