By Chinwendu Obienyi
The The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) has been urged to rethink its policies to promote output growth.
Experts say further tightening is possible to anchor inflation expectations, adding that they expect the Committee to raise the monetary policy rate (MPR) by at least 50 basis points. basic.
The MPC faces the decision to maintain or further increase the MPR at a time when global central banks continue their cycle of interest rate hikes despite growing risks to growth due to the fact that the Committee will meet today and Tuesday.
It is also expected that the MPC will assess the national and global economic environment, in particular the main economic and financial indicators since its last political meeting.
In their reaction, analysts noted that the impression of Q2 2022 growth (+3.54% year-on-year) suggested the committee may be getting cautiously comfortable with growth levels, giving it a good reason. necessary to continue its fight against stubbornly high growth. inflationary pressures, especially since a sustained negative real interest rate could dampen domestic investment and undermine the stability of the local currency. “Furthermore, the more hawkish version of global central banks also support the Committee which is following the same path to reduce external pressures. Thus, we believe that further tightening is needed to anchor inflation expectations. Therefore, we expect the Committee to increase the MPR by at least 50 bps and adjust the asymmetric corridor to its pre-COVID level (+200/-500 bps) from +100/-700 bps base around the MPR.
We also expect the Committee to remain concerned about continued inflationary pressures even as the primary harvest season gets underway amid high input and fertilizer costs.
Thus, we expect the Committee to urge the fiscal authority to maintain its interventions in the real sector and take decisive action to address the structural challenges limiting food production in the country,” Cordros Research analysts said.
For his part, a development economist, Dr. Emeka Okengwu, who spoke on a program monitored by Daily Sun, noted that it is high time for the committee to redefine policies by adopting a multidimensional approach to solving the problem of the economy.
“I think we’re between a rock and a hard place now. Remember that the United States has raised its own interest rate and has had two consecutive negative growths, which means that it is technically in a recession. The euro and the pound are doing very badly against the dollar for the first time and we are part of this global mix. Instead of praying we should think more and even if the rates are increased or not the truth remains that if you don’t put us into production and I mean follow the word that means we have to rethink our policies and the how we direct our policies here and scale what we do.
We need to stop having a one-size-fits-all approach rather than having a multidimensional approach to solving the problems of our country, because no matter how much the FG wants to solve, if the local government who are the main components are not directly involved , then we’re going to have disruption,” he explained.
Okengwu added, “There is nothing wrong with borrowing, but we need to borrow properly and that involves the right skills, the right knowledge, the right markets to be able to return the borrowed money. This is where we have a very big gash. We need to close ranks between fiscal and monetary, but in doing so we need to focus on the most critical components that we need.”