ADVERTISEMENT
The Sun Nigeria
  • Home
  • National
  • Columns
    • Broken Tongues
    • Capital Matters
    • Diabetes Corner
    • Duro Onabule
    • Femi Adesina
    • Frank Talk
    • Funke Egbemode
    • Insights
    • Kalu Leadership Series
    • Kunle Solaja
    • Offside Musings
    • PressClips
    • Public Sphere
    • Ralph Egbu
    • Shola Oshunkeye
    • Sideview
    • The Flipside – Eric Osagie
    • Tola Adeniyi
  • Business
  • Politics
  • Entertainment
  • The Sun TV
  • Sporting Sun
No Result
View All Result
  • Home
  • National
  • Columns
    • Broken Tongues
    • Capital Matters
    • Diabetes Corner
    • Duro Onabule
    • Femi Adesina
    • Frank Talk
    • Funke Egbemode
    • Insights
    • Kalu Leadership Series
    • Kunle Solaja
    • Offside Musings
    • PressClips
    • Public Sphere
    • Ralph Egbu
    • Shola Oshunkeye
    • Sideview
    • The Flipside – Eric Osagie
    • Tola Adeniyi
  • Business
  • Politics
  • Entertainment
  • The Sun TV
  • Sporting Sun
No Result
View All Result
The Sun Nigeria
No Result
View All Result
Home Cover

Matters arising from MPC meeting

30th July 2018
in Cover, Editorial
0
MONETARY POLICY
0
SHARES
128
VIEWS
Share on FacebookShare on Twitter

With the retention of the monetary policy rate at 14 per cent, the economy will continue to slide in spite of government’s efforts to stimulate it.

After its recent meeting in Abuja, the Monetary Policy Committee (MPC) retained the 14 per cent Monetary Policy Rate (MPR). It also retained all monetary parameters, despite calls to reduce the MPR, which is the rate at which CBN lends money to Deposit Money Banks. The committee also retained Cash Reserve Ratio (CRR) at 22.5 percent and the Liquidity Ratio at 30 percent, among others. While we do not see any reason for the committee to still hold on to the 14 per cent monetary policy rate for the 12th consecutive time since July, 2016, we welcome the MPC advice to the Federal Government to save for the “rainy day.”

As usual, the CBN Governor, Mr. Godwin Emefiele, defended all the decisions taken at the two-day meeting.

READ ALSO: FG not committed to saving for rainy day – CBN

He explained that seven of the 10 members of MPC voted in favour of the retention of the lending rate at 14 per cent, while two members voted for a reduction and one member voted for a hike in the policy rate. The CBN boss also said that the committee considered the tightening of interest rate with the belief that such measure would curtail the threat of a rise in inflation.

Emefiele also noted that notwithstanding the deceleration in headline inflation, the current double-digit inflation remains above the apex bank’s six to nine per cent target. According to him, the MPC believed that tightening the interest rate will stem the tide of capital flow reversal in the face of sustained monetary policy nominalisation in some advanced economies. The decision, he said, would “rein in inflationary pressure and moderate inflation rate to single digit levels, increase real interest rate, build investors confidence and further stabilise the country’s exchange rate.” This decision, he stressed, was taken considering the potential effect of stimulating aggregate demand through lower cost of capital.

READ ALSO: Inflation down by 11.23% in June – NBS

The CBN’s argument for maintaining the current policy is the same argument it advanced in the last two years, even when both headline and core inflation rates had been on a downward trend. In fact, that argument is no longer persuasive. At present, the inflation rate is 11.23 per cent, according to figures released by the National Bureau of Statistics (NBS). With the retention of the monetary policy rate at 14 per cent, the economy will continue to slide in spite of government’s efforts to stimulate it. Nigeria has one of the highest interest rates in the world. Britain, Australia, Canada and

the United States have lending rates of less than 2 per cent. Perhaps, this can explain why the Minister of Finance, Mrs. Kemi Adeosun, in 2016, urged the CBN to lower the interest rate to enable government and private sector operators to borrow at economically viable rates that could reflate the economy and jumpstart growth. Unfortunately, her advice was rebuffed.

Now, many Small and Medium Enterprises (SMEs) are facing tough times because of high interest rates. Even access to CBN’s intervention fund for small businesses is not easy because of hike in interest rates and other stringent conditions imposed by commercial banks. Despite the refusal of the monetary authority to heed the call to bring down lending rates, we give it credit for advising the government to save for the future. The recent rise in crude oil prices in the international market and the increase in allocations from the Federation Account Allocation Committee (FAAC), make strong case for saving.

READ ALSO: FAAC deadlock: NNPC can’t continue spending public funds without approval – Governors

We recall that a similar advice by the then Finance Minister, Dr. Ngozi Okonjo-Iweala, some years ago, was not heeded. Rather than save, the government succumbed to the pressure from the state governors and shared the money.

Although the Federal Government set up the Sovereign Wealth Fund (SWF) in 2011 with a seed capital of N150billion for budgetary stability, the total savings in the fund as at May 2018 is said to be too little for the “rainy day.” Government should be prudent and save.

At the same time, the CBN should substantially reduce the lending rate. Without it, access to borrowing, which will stimulate the economy, is likely to be hampered. The current lending rate is a disincentive to business and job creation.

Tags: adeosuncapital flowcash reserve ratiocbnCRRFAACgodwin emefielekemi adeosunmonetary policymonetary policy committeemonetary policy rateMPCMPRnational bureau of statisticsNBSokonjo-iwealasmall and medium enterprisesSMEssovereign wealth fundSWE
David

David

Sun News Online team

Related Posts

Nigeria’s COVID-19 vaccine arrives Tuesday - SGF
Cover

Nigeria’s COVID-19 vaccine arrives Tuesday – SGF

28th February 2021
Stiffer sanctions for possession of illegal arms
Editorial

Abdulsalami’s timely warning on looming anarchy

28th February 2021
Third Mainland Bridge closure: FG, LASG officials inspect alternative routes
Cover

Third Mainland Bridge opens to traffic after 6 months closure

28th February 2021
Next Post
EXPERTS $47.2 BILLION

Anxiety mounts over Nigeria’s declining fiscal buffers

ASPIRING CANDIDATE ATIKU

Atiku’s poised to rescue Nigeria – Spokesman

MILLION BOTTLES

FG recalls 2.4m bottles of cough syrup with codeine

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Highlights

Mining ministry expects investors’ influx this year, says Minister

Ministry to disburse N200 million to 100 artisanal miners

FG gives Mines & Steel Ministry N6 billion COVID-19 response lifeline

NNL working closely with clubs, others on welfare of players, officials

ALSCON strategic to Nigeria’s economic diversification: Minister

Equity partnership, game changer for Ajaokuta, says Adegbite

Trending

PDP convention in PH dissolves NEC, sets up 7- man caretaker committee
National

Uche Nwosu, PDP want Supreme Court to return Ihedioha

28th February 2021
0

  Daniel Kanu Disqualified Candidate of Action Alliance (AA) by the Supreme Court in the 2019 Imo...

Ondo nurses to commence warning strike Monday

Ondo nurses to commence warning strike Monday

28th February 2021
Ignorance, poverty, illiteracy main causes of insecurity - Ex-Zamfara governor

Ignorance, poverty, illiteracy main causes of insecurity – Ex-Zamfara governor

28th February 2021
Mining ministry expects investors’ influx this year, says Minister

Mining ministry expects investors’ influx this year, says Minister

28th February 2021
Ministry to disburse N200 million to 100 artisanal miners

Ministry to disburse N200 million to 100 artisanal miners

28th February 2021

Follow us on social media:

Categories

  • Abuja Metro
  • Arts
  • Broken Tongues
  • Business
  • Business Week
  • Cartoons
  • Citizen Joe
  • Columns
  • Cover
  • Culture
  • Duro Onabule
  • Editorial
  • Education Review
  • Effect
  • Elections
  • Entertainment
  • Events
  • Features
  • Femi Adesina
  • Food & Drinks
  • Frank Talk
  • Funke Egbemode
  • Gallery
  • Global Square by Kenneth Okonkwo
  • Health
  • Insights
  • Kalu Leadership Series
  • Kunle Solaja
  • Kunle Solaja
  • Letters
  • Lifeline
  • Lifestyle
  • Literary Review
  • Marketing Matters
  • Muiz Banire
  • National
  • News
  • Offside Musings
  • Opinion
  • oriental news
  • Politics
  • Press Release
  • PressClips
  • Public Sphere
  • Ralph Egbu
  • Shola Oshunkeye
  • Sideview
  • South-west Magazine
  • Sponsored Post
  • Sporting Sun
  • Sports
  • Sun Girl
  • Tea Time
  • The Flipside – Eric Osagie
  • The Sun Awards Live
  • The Sun TV
  • Thoughts & Talks
  • Time Out
  • Today's cover
  • Tola Adeniyi
  • Travel
  • Travel & Tourism
  • Trending
  • TSWeekend
  • Turf Game
  • Uncategorized
  • Updates
  • Views from Abroad
  • Voices
  • World
  • World News
  • Home
  • About Us
  • Paper Ad Rate
  • Online Ad Rate
  • The Team
  • Contact Us
  • Privacy Policy

© 2019 The Sun Nigeria - Managed by Netsera.

No Result
View All Result
  • Home
  • National
  • Columns
    • Broken Tongues
    • Capital Matters
    • Diabetes Corner
    • Duro Onabule
    • Femi Adesina
    • Frank Talk
    • Funke Egbemode
    • Insights
    • Kalu Leadership Series
    • Kunle Solaja
    • Offside Musings
    • PressClips
    • Public Sphere
    • Ralph Egbu
    • Shola Oshunkeye
    • Sideview
    • The Flipside – Eric Osagie
    • Tola Adeniyi
  • Business
  • Politics
  • Entertainment
  • The Sun TV
  • Sporting Sun

© 2019 The Sun Nigeria - Managed by Netsera.

Welcome Back!

Login to your account below

Forgotten Password?

Create New Account!

Fill the forms below to register

All fields are required. Log In

Retrieve your password

Please enter your username or email address to reset your password.

Log In

Add New Playlist