Expert Gives Hint On Rate Increase Ahead Of MPC Meeting

Abuja, May 19, 2024 (NAN) As the Monetary Policy Committee (MPC) meets on Monday, a financial expert, Prof Uche Uwaleke, says the committee will likely increase the baseline lending rate by another 100 basis points.

Uwaleke, a Professor of Capital Market and the President of Capital Market Academics of Nigeria, said this in an interview with the News Agency of Nigeria (NAN) on Sunday in Abuja.

NAN reports that the MPC, under the leadership of Mr Yemi Cardoso, had increased the Monetary Policy Rate (MPR) by 400 basis points in February and 200 basis points in March.

This led to a cumulative increase of 600 basis points, moving the MPR from 18.75 per cent to 24.75 per cent, in line with aggressive tightening of the CBN to target spiralling inflation.

According to Uwaleke, we should expect another increase of at least one percentage point.

“Inflation rose year-on-year in March in spite the hike in February, and the exchange rate has yet to stabilise.

“So, MPC will still be concerned about the need to narrow the negative interest rate.

“Again, following the IMF/World Bank spring meetings last April, the CBN has received praise from the IMF and some global rating agencies such as Fitch for its monetary policy tightening stance.

“MPC will be mindful of that in order not to create a different impression, especially when the Bretton Woods Institutions are urging the apex bank to do more,” he said.

He, however, urged the committee to retain the prevailing rates to mitigate the impact of its aggressive policy tightening on Nigerians.

“If I were a member of the MPC, I will vote for a hold position as the aggressive policy rate hike is taking a toll on output.

“Production is stiffled because of the very high cost of funds. Moreover, the seeming over reliance on the MPR as a tool to tame inflation does not appear to be making any meaningful impact.

“This is due to the significant non-monetary factors driving inflation in Nigeria, such as high cost of energy, transport as well as insecurity in the food-belt regions of the country,”  he said. (NAN)

Send Us A Press Statement Advertise With Us Contact Us

 And For More Nigerian News Visit GWG.NG