MPC: ABCON President anticipates rate hike to tame inflation

The Association of Bureau De Change Operators of Nigeria (ABCON)  anticipates a further increase in benchmark rates by the Central Bank of Nigeria’s Monetary Policy Committee (MPC) to address the persistent inflation rate.

Its President, Alhaji Aminu Gwadabe, made the forecast in a telephone interview with newsmen in Lagos, ahead of the next MPC meeting scheduled for March 25 and March 26.

Gwadabe commended the CBN on its recent reforms aimed at boosting the economy and its continued efforts in taming inflation.

The CBN, on Feb. 27, at its last MPC meeting, raised the monetary policy rate (MPR), which benchmarks interest rates, from 18.75 percent to 22.75 percent.

It also increased the cash reserve ratio (CRR) from 32.5 percent to 45 percent while retaining the liquidity rate at 30 per cent.5

However, the headline inflation rate which stood at 29.90 percent in January, rose to 31.70 percent as at February.

The ABCON boss said the completion of the clearance of the valid foreign exchange backlog was a good development in the forex market that gave the Naira a positive outlook, attracting foreign investors.

“We are also seeing how they are using the securities to attract foreign investments, which are oversubscribed. That is also having a lot of positive impact on the exchange rate.

“We have also seen how they took the bold decision to reinstate the BDCs window to deepen the market, which has broken the camel’s back,” he said.

He underscored the importance of sustaining the current momentum in curbing Naira volatility and improving economic growth.

“As we speak, as of today before the meeting, the exchange rate of the Naira to the United States dollar is awesome. It’s reassuring and shows that the CBN has the muscles and arsenal to protect the value of the Naira.

“In summary, that is my observation: the increasing resilience, capacity, and arsenal of the Central Bank of Nigeria to defend our local currency through several measures.

“My advice is for them to continue widening and undergo a paradigm shift in sourcing foreign exchange for the economy,” he said.

Gwadabe also urged the MPC to explore alternative avenues for sourcing foreign exchange, emphasising the significance of clearing valid foreign exchange backlog to enhance market stability and attract foreign investors.

He lauded the CBN’s decisive actions, citing the reinstatement of BDCs as a significant move that had positively influenced the forex market.

He noted that such bold decisions by the central bank had instilled confidence in the market, reflected in the strengthening of the Naira against major currencies.

In light of ongoing challenges in the oil sector, Gwadabe called for diversification efforts and emphasised the importance of synergy between fiscal and monetary policies.

He noted that effective collaboration between the government and the CBN was crucial for achieving sustainable economic stability.

He reiterated the role of BDCs in moderating market volatility and stressed the importance of treating them as essential partners in implementing monetary policies effectively.

Gwadabe, therefore, urged the committee to consider proposed reforms by ABCON, including granting preferential treatment to BDCs to enhance their capacity and ensure their contributions to market stability are maximized