MPC Retains MPR At 13.5% To Sustain Economic Gains
Umoru Abdulkadir
The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) ended its two-day meeting Tuesday, deciding to retain the Interest rate at 13.5 per cent to sustain the economic growth.
Governor Mr Godwin Emefiele said the committee unanimously voted to hold the MPR owing to the conviction by the committee members that key macroeconomic indicators were trending in the right direction and as such should not reverse the already achieved growth in the economy
The MPC also retained the asymmetric corridor of +200/-500 basis points around the MPR. Also hold were the Cash Reserve Ratio at 22.50 per cent and the Liquidity Ratio at 30 per cent, maintaining the old order.
Speaking on the country’s current land border closure with neighbouring countries, he advised the Federal Government to sustain the closure in order to create jobs for the youths and keep industries alive.
the new development came on the heel of the plea by the Nigerian House of Representative which members Wednesday urged a downward review of the Monetary Policy Rates (MPR) owing to the growing cost of doing business in the banking sector.
The House noted that there was a need to control the interest rates of banks’ lending particularly to Small and Medium Enterprises (SMEs), manufacturers and Industrialists.
In his motion titled “Need to Investigate Banks’ Lending Practices, Protect Borrowers from Exploitative Interest Rates and Promote Economic Development,” Fatoba Olusola (APC–Ado Ekiti/Irepodun-Ifelodun Federal Constituency), led the debate.
Olusola said high lending rates impede economic growth as they make access to bank loans difficult, and when it is made to be high by the Central Bank of Nigeria (CBN), commercial banks would make theirs higher.
“When lending is at a high interest rate, profits in the manufacturing process are eroded which makes it difficult or unattractive for manufacturers to continue in business,” he said.
“High interest rates cannot both contain inflation and stimulate economic growth at the same time, while in reality citizens, Small and Medium Enterprises, manufacturers and investors are bearing the brunt of the “cut throat” lending rates where the banks and their directors remain the major beneficiaries of the high lending rates,” he noted.
The House, therefore, urged the National Economic Council to consider how to reduce the cost of doing business in Nigeria in a manner that the common man will feel the impact.
It also mandated its Committee on Banking and Currency to interface between commercial banks to ascertain the justification for the big gap between the MPR and the lending rates.
Monetary policy rate, otherwise known as interest rate controls money supply, credit availability and inflation rate.
With interest rate at 13.5 per cent, Nigeria is the sixth most difficult country for Micro Small and Medium Enterprises (MSMEs) to obtain loans, which is at par with Malawi. It is lower than only Zimbabwe’s rate of 35 per cent, Sierra Leone’s 16.5 per cent, Ghana’s 16 per cent, Angola’s 15.5 per cent and Sudan’s 15.4 per cent.
Comments are closed.