Expert raises series of questions for CBN over retaining key interest rate at MPC meeting
Leading Abuja based development economist, Mr. Odilim Enwegbara has angrily reacted to the retaining of all rates at the end of the last Monetary Policy Committee (MPC) meeting by the Central Bank of Nigeria (CBN), saying such act is giving a fake impression of real life situation in the economy after all.
In his views, retaining the key interest rates only portrays the members of the committee as an unserious MPC team.
He queried “if the economy is this static or is the recession now over to warrant keeping the MPR unchanged?’
“Does it mean that as far as the members of the MPC are concerned the current high cost of money is okay that it needs to be encouraged? Why should what is militating against the real sector investment, investment badly needed to grow the economy out of recession, be encouraged?
“Should the CBN be encouraging or discouraging high interest rate, especially given how high interest rates discourage domestic borrowing for industrial activities? The current MPR is only good for importation of finished goods since most importers can afford high interest rates in such presence of an increasingly strong naira. Is the naira strong because we are importing less and exporting more?
“Why should the CBN through its interventions in the same market that is supposed to be market-driven have to artificially subsidise dollar in order to create a falsely strong naira? That is why I am of the opinion that in recessionary economies like ours, bringing down the cost of money is more important than fighting inflation blindly; after all, high cost of money is an important cause of high inflation.
In his leading submission, Enwegbara said “My advice is let the MPC focus more on lowering interest rates which will increase real sector investments and grow the economy and jobs, and less on defending the naira since such a strong naira only grows our appetite for imported goods”.