By Seun Ibiyemi, Lagos and Mathew Dennis, Abuja
Economic experts have projected a hike and tightening of the benchmark interest rate known as the Monetary Policy Rate (MPR) by the Monetary Policy Committee (MPC) ahead of their inaugural meeting of 2024.
Recall that the last meeting of the MPC was held in July 2023, and was presided over by the then acting CBN governor, Folashodun Shonubi.
At the July 2023 meeting, the committee had raised MPR by 25 basis points to 18.75 per cent from 18.50 per cent.
When questioned earlier in February on why his administration was yet to hold an MPC meeting, Cardoso explained that he was concerned about the transmission of the monetary policy, describing it as “questionable.”
“Firstly, I was a bit concerned when I became governor of the central bank and engaging you know, with various stakeholders, both internally and externally, that a lot of work seems to have been done around MPC,” Cardoso said.
“A lot of work, a lot of discussions have been held around it and you know what, I was concerned that transmission was questionable.
“I didn’t want a situation where we started back on that same trajectory. It is for that reason that we took our time to ensure that as much as possible, we can put ourselves in a position where the MPC will be impactful and where it will complement the activities of the fiscal side and show that moving.
“We’re moving the economy in the right direction and we are signalling the economy in the right direction.”
Speaking to Nigerian NewsDirect via a telephone conversation, the Chief Executive Officer of Marble Capital, Dr. Akin Oyewale predicted that the meeting is likely to raise the Monetary Policy Rate (MPR) with the economic situation.
The financial expert said, “Given the high inflation regime and considering what we are seeing from the gilt edged securities trading levels, it is likely that the MPC could raise the MPR.”
He argued that the CBN has access to tons of data that would guide their decisions to stabilise the economy.
Similarly, an Economist and Managing Director of Financial Derivatives, Bismarck Rewane had 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 of that 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.
Also speaking to Nigerian NewsDirect, the President of the Nigeria Workers Group (NWG), Dr. David Kayode Ehindero stressed that the apex bank in the MPC meeting should focus on providing remedy to the skyrocketed inflation.
He suggested that there should be more support from the fiscal authorities for instance in providing incentives to encourage more manufacturing activities considering the fact that the economy is comatose.
According to him, “All the social programme intervention by Tinubu’s Administration should be transparent and accounted for since the people designated for the programme are not benefiting from it.”
Dr. Ehindero revealed that at the MPC discussion should be tailored on the reality of the economy with immediate effects.
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.
The Senate last week confirmed Mr 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 Shehu (Permanent Secretary, Ministry of Finance), Murtala Sagagi (CBN director), Aloysius Ordu, Aku Odukemelu, Mustapha Akinwunmi, and Bamidele Amoo.