P
ProfRem
Guest
As the CBN monetary policy committee meets today and tomorrow, experts say the forex market and inflation would top discussions.
The CBN, at the last MPC meeting, hiked bench mark interest rate to 12 from 11 percent, in response to headline inflation put at the time at 11.38 per cent. That policy direction seemed not to yield significant result as inflation went up to over 13.7 percent in April.
Commenting, Mr. Rislanudeen Muhammad, the Senior Fellow and Monetary Policy Lead at the Institute for Fiscal Studies Nigeria (NIFS), said definitely the MPC would be in a difficult situation as they meet.
“With little or no fiscal buffer, weak reserve, weak forex earnings in an import dependent economy, underlying imperative for devaluation was well documented. However CBN may still not devalue for political not economic reasons,” he noted.
He said while 2016 fiscal budget was rightly expansionary, geared towards stimulating the economy, MPC headed towards monetary tightening to attack inflation by jerking up MPR and CRR at its last meeting, implying increased cost of borrowing and a negation of single digit interest rate envisaged in the 2016 fiscal budget.
Source: DailyTrust
The CBN, at the last MPC meeting, hiked bench mark interest rate to 12 from 11 percent, in response to headline inflation put at the time at 11.38 per cent. That policy direction seemed not to yield significant result as inflation went up to over 13.7 percent in April.
Commenting, Mr. Rislanudeen Muhammad, the Senior Fellow and Monetary Policy Lead at the Institute for Fiscal Studies Nigeria (NIFS), said definitely the MPC would be in a difficult situation as they meet.
“With little or no fiscal buffer, weak reserve, weak forex earnings in an import dependent economy, underlying imperative for devaluation was well documented. However CBN may still not devalue for political not economic reasons,” he noted.
He said while 2016 fiscal budget was rightly expansionary, geared towards stimulating the economy, MPC headed towards monetary tightening to attack inflation by jerking up MPR and CRR at its last meeting, implying increased cost of borrowing and a negation of single digit interest rate envisaged in the 2016 fiscal budget.
Source: DailyTrust
