Emefiele Reveals Why CBN Can’t Cut Interest Rate
Nigeria’s Monetary Policy Rate (MPR) currently stands at 14%.
It defiles the rule of gravity - not everything that goes up in Nigeria will come down.
This MPR determines how much interest banks charge on the loan people seek from them.
The rate is reviewed bi-monthly and it may be reviewed on Tuesday, July 25 when the MPC meeting holds in Abuja.
Also read: CBN Sells Treasury Bills Above Inflation To Attract Dollar Flows
According to the Governor of the Central Bank of Nigeria, CBN, Godwin Emefiele, blames the static MPR on high inflation rate and rising operating costs in the banking sector.
In other words, as long as inflation remains above single digits and banks continue to spend so much money to remain in business, interest rate may never come down.
This was Emefiele’s position when he spoke at his alma mater, University of Nigeria, Nsukka in a lecture titled: ‘The Dilemma Of Monetary Policy And Exchange Rate Management In A Recession: Potential Options For Nigeria’.
The lecture was part of a second homecoming series of the Economics Department of the University where Emefiele graduated with a B.Sc. Finance in 1984.
Emefiele, said with inflation rate still hovering above 16%, the apex bank would be failing in one of its key mandates if it reduced interest rates.
Meanwhile, compared with other African economies such as Kenya at 10%, South Africa 7%, Rwanda 6.25%, Ghana’s 6.75%, and Cameron at 2.95%, Nigeria’s MPR remains one of the highest at 14%.