Financial experts on Wednesday described as futuristic and pragmatic the decision of the Central Bank of Nigeria (CBN) to retain the lending rate at 14 per cent alongside other monetary policy parameters.
They told the News Agency of Nigeria (NAN) in Lagos, that maintaining the rate was due to the present economic development.
Alhaji Aminu Gwadabe, the President, Association of Bureau De Change Operators of Nigeria (ABCON, said that the action was futuristic and pragmatic considering the financial intelligence of the CBN.
“I also believe the reason behind the CBN action is to watch the likely impacts of pre-election behaviour and to readily thwart any unwholesome activities,’’ Gwadabe said.
He noted that the continued maintenance of the constant macroeconomic parameters would make speculators to continue with their behaviour.
Prof. Sheriffdeen Tella, a Senior Economist at the Olabisi Onabanjo University, Ago-iwoye, Ogun said that the maintenance of the lending rate was pertinent to halt the headwind inflation in the economy.
Tella urged the CBN to beam its searchlight on spending by politicians so as not to increase inflationary pressures.
The economist said that containing inflation now should be a major preoccupation of the CBN.
NAN reports that the CBN had since July 2016 held the MPR at 14 per cent alongside other monetary policy parameters.
The CBN rose from its first Monetary Policy Committee meeting in 2019 maintaining the Monetary Policy Rate at 14 per cent and all other variables unchanged.
Liquidity ratio was left at 30 per cent, Cash Reserve Ratio at 22.5 per cent, and the asymmetric corridor unchanged at +200/-500 basis points.
MPR is the interest rate at which CBN lends to the commercial banks.
It is also the benchmark against which other lending rates in the economy are pegged and is usually used as an instrument to moderate inflation in the economy.
The Cash Reserved Ration (CRR) refers to the ratio of customer deposits (your money in the bank) that are expected to hold as cash or kept with the CBN.
