As the Central Bank of Nigeria (CBN) 297th Monetary Policy Committee (MPC) prepares to meet on Monday and Tuesday, Sept. 23rd to 24th, a Commonwealth Institute Director and Political Economist,Prof. Anthony Kila, has stayed that it is safe to say that only one of three outcomes is possible.
This is just as he said that the MPC either increase, decrease or keep interest at the same level.
Kila suggested that the MPC pause the hike in interest rates but that none of these outcomes will matter to most in the country.
Kila pointed out that most organised and noteworthy economies, the MPC meetings are anticipated with anticipation and hope, adding that the outcomes of these meetings have direct impacts on various sectors of the economy, including financial, retail, and real estate, because interest rates matter for and affect everyone.
Such, he said is not the case in the Nigerian system, where a more significant part of the economy is neither captured in nor affected by interest rates.
He noted that the only rate that affects most Nigerians is the foreign exchange rate, and the MPC cannot directly and impactfully affect that.
According to him, Another problem with the MPC is that the inflation rates they use for the analysis do not reflect what most people are experiencing in their everyday lives. With rates that do not reflect Nigerians’ realities, the MPC’s interventions remain academic exercises or, at best, interventions that affect very few.
For the MPC to matter, the CBN needs to take cognisance of these limits and work towards reviewing its index for measuring inflation, growth, and other economic indices. It should also work towards making interest rates central to people’s lives by deliberately enhancing consumer finance facilities and processes and allowing fiscal policies to take their rightful place in the economy.
Recall that the CBN had announced on Wednesday that its 297th MPC meeting will be held on September 23 and 24, 2024 and that the two-day event is scheduled for the bank’s headquarters in Abuja.
A statement by the apex bank informed that the meeting will focus on reviewing the country’s economic and financial conditions and determining the appropriate monetary policy direction for the short to medium term.
The MPC is the highest decision-making body of the CBN, responsible for formulating policies to maintain price stability, support economic growth, and manage inflation.
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