CBN to hold first MPC meeting under Yemi Cardoso

By Sodiq Adelakun

The Central Bank of Nigeria (CBN) is set to hold its first Monetary Policy Committee (MPC) meeting under the leadership of Yemi Cardoso as Governor on Monday and Tuesday.

Economic experts are predicting that the benchmark interest rate, known as the Monetary Policy Rate (MPR), will likely be increased in order to combat inflation and stabilise the value of the Naira.

The previous MPC meeting was held in July 2023 and was chaired by the then acting CBN governor, Folashodun Shonubi. During that meeting, the committee raised the MPR by 25 basis points to 18.75 per cent from 18.50 per cent. Professor Ken Ife, an Economist, believes that interest rates are likely to continue tightening for the foreseeable future.

He suggests that the MPR may either remain unchanged or be raised further in the upcoming meeting.

According to Prof. Ken Ife, an Economist, “We are likely to see rates tightening for some time. Either the MPR is kept steady, or it goes up a little more.

“The CBN says it is going for inflation targeting, but there should be more support from the fiscal authorities because a lot of the issues with the economy are not really monetary.

“We have N500 billion going for social intervention annually, the money does not go into the productive sector,” he said.

A past president of the Chartered Institute of Bankers of Nigeria (CIBN), Mr Okechukwu Unegbu, also said that the rates are likely to go up.

Unegbu, however, said that the MPC decisions are not likely to impact the economy in the short-term.

“I expect that the MPC will further tighten the rates, but that might not have any serious impact on the economy.

“President Bola Tinubu has already taken some sensitive policy decisions, even before appointing the CBN governor and the finance minister.

“Floating the Naira was a major error that has caused the nation so much pain,” he said.

He urged the government to try operating outside the purview of the Organisation of Petroleum Exporting Countries (OPEC), and pricing the country’s major revenue earner, crude oil, in Naira.

“Nigeria should do something about pricing its oil in Naira. We should leave OPEC, price our oil independently,” he said.

Unegbu also advised that the government should learn to ignore most economic prescriptions by the World Bank and the International Monetary Fund (IMF) as such prescriptions had never helped the country to grow.

An Economist and Managing Director of Financial Derivatives, Bismarck Rewane, a business management consultancy firm, also suggested that the MPR would be tightened.

According to Rewane, loose monetary conditions are totally different from tight monetary policy.

“We have no choice. They must tighten and tighten well. I suggest nothing less than 200 basis points.

“You fight loose monetary conditions by tightening monetary policy.

“There will be an effect because interest rate will increase, people will save more and consume less, and the currency will stabilise over time. There is no quick-fix,” he said.

Meanwhile, the Nigerian Senate on Thursday confirmed Cardoso as Chairman and 11 other members of the MPC forwarded to it by President Bola Tinubu.

Also confirmed as members of the MPC were Muhammad Abdullahi,  Bala Bello, Emem Usoro and Philip Ikeazor, all deputy governors of CBN.

Others were Lamido Yuguda, (DG Securities and Exchange Commission), Jafiya Lydia Shehu, (Permanent Secretary, Ministry of Finance), Murtala Sagagi (CBN director), Aloysius Ordu, Aku Odukemelu, Mustapha Akinwunmi, and Bamidele Amoo.