Financial experts differ on CBN’s retention of interest rate at 14%

Financial experts have expressed mixed feelings over the retention of the benchmark interest rate of 14 per cent alongside other policy parameters by the Central Bank of Nigeria (CBN).  While one argued for a loosening of the monetary policy to accelerate production in the economy, the other approved the retention of the interest rate based on the high inflation figure.

Monetary Policy Committee (MPC) of the CBN rose from its meeting retaining the benchmark interest rate at 14 per cent alongside other monetary policy parameters.

Dr Chijioke Mgbame, Associate Professor of Accountancy, University of Benin, told NAN that it was time to loosen the monetary policy to allow the manufacturing sector to flourish. Mgbame said that the growth in the Gross Domestic Product (GDP) was a reflection of the stability in the oil sector and the price of oil at the international market.

According to him, the economy should diversify toward more production of goods and services and a loosening of monetary policy will lead to more access to finance. “Retaining the MPR at 14 per cent is pure conservatism on the part of the policy makers considering the fact that economic growth was still fragile,’’ Mgbame said.

Alhaji Aminu Gwadabe, President, Association of Bureau De Change Operators of Nigeria (ABCON), said the CBN’s retention of the benchmark interest rate was in the right direction. According to him, the inflation rate at 15.9 per cent remains a challenge for a rate cut.

The financial expert commended the CBN for not bowing to pressures for a rate cut, adding that given the growth in the economy and renewed confidence, a rate cut might come naturally at the appropriate time.