Analysts have taken different positions on the retention of the Monetary Policy Rate (MPR) at 14 per cent by the Central Bank of Nigeria (CBN).
The analysts spoke in separate interviews in Abuja yesterday. The Chief Executive Officer, Economic Associates, Dr Ayo Teriba, said to protect the economy and financial market, the Monetary Policy Committee (MPC) was right to retain the MPR at 14 per cent.
“If you look at inflation, it has declined for 15 conservative months; also, exchange rate, particularly on the parallel market, has gone down from N500 per dollar in January 2017, to N360 now.
“So, if you’ve got growth increasing and inflation declining, exchange rate appreciating and stabilising, perhaps you will want to leave the economy on whichever course that has produced those results.
“Sometimes, no decision is the right decision. The committee shouldn’t change the rates just to show the world that they are not passive,” he said.
Similarly, Prof. Uche Uwaleke of the Banking and Finance Department, Nasarawa State University, said holding the rates at 14 per cent would balance risks in the economy.
“Inflation rate at 12.4 per cent is still above the CBN threshold of nine per cent. Single digit inflation would justify easing monetary policy. This is not yet the case.
“Then, rising interest rates in the U.S., following normalisation policy, is already triggering capital flows out of developing economies including Nigeria. Lowering the MPR would induce more capital outflows.