Experts ask CBN for a realistic approach to monetary policy decisions


Financial experts have called on the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) to take a more realistic approach to its policy decisions.

The notice comes as the MPC is due to hold its bi-monthly meeting on Monday.

The experts, who spoke in separate interviews, urged the committee to take practical policy decisions to effectively address the country’s monetary and economic challenges.

A former president of the Chartered Institute of Bankers of Nigeria (CIBN), Okechukwu Unegbu, urged the committee to conduct thorough research on the economy before presenting its parameters.

Mr Unegbu said the idea of ​​keeping the same parameters for several months without any positive economic impact made MPC meetings feel like routine.

The MPC had kept the monetary policy rate (MPR) at 11.5 percent and kept all other parameters constant in its last nine meetings.

“Keeping the same parameters for so long without visible improvements indicates that the committee and the apex bank are not doing enough,” he said.

Mr. Unegbu also advised the apex bank to reduce its interventions in different economic sectors so as not to “cause dislocation in the monetary system”.

One economist, Lanre Olaniyan, said sticking to the same metrics for the umpteenth time amid rising inflation and other economic challenges means something is wrong.

Mr. Olaniyan, professor of economics at the University of Ibadan, urged the MPC to be aware of the impact of its prevailing parameters to be guided appropriately.

However, another economist, Tope Fasua, urged the MPC to be careful in its policy decisions so as not to worsen the situation.

“Except we want the CBN to be adventurous, if it raises the monetary policy rate (MPR), it is a signal for depository banks to raise lending rates.

“And, generally, lending rates will go up much more than deposit rates.

“Manufacturers and other stakeholders will blame the apex bank for making their lives more difficult. But if they do, the goal could also be to slow inflation.

“The second point is that if they go down, inflation could keep going up. If we want to be experimental, we could push for a reduction in tariffs,” he suggested.

At the last MPC meeting in March, the 10 members present were divided on the political decisions and the parameters to be adopted.

Three members voted to increase the MPR by 25 bps, one member voted to increase the MPR by 50 bps while another six members voted to keep all metrics constant.

According to CBN Governor Godwin Emefiele, the committee was of the view that raising rates during inflation could have a negative impact on economic recovery and stifle the expected investment expansion.



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