The Central Bank of Nigeria has come under fire from Godwin Obaseki, the governor of Edo State, for hiking the Monetary Policy Rate by 22.75%.
Obaseki said that the choice is insufficient to address the nation’s persistent economic problems.
He suggested the need to boost local production to meet the demand for goods and services.
As seen in a video released on his official Twitter account on Monday, the governor expressed this viewpoint during his remarks as a guest speaker at the Annual Dinner of the Edo Zone Bankers Committee in Benin City, the capital of Edo State.
He said, “I understand the monetary rationale for increasing MPR but fundamentally and fiscally, it is not going to lead to growth in our economy.
“We must focus on the fundamentals which is increasing production, making sure our citizens produce the goods and services we consume and depend less on import.
“Our economic policy and monetary policy cannot be determined by exchange rate alone. So, this whole issue of increasing the cash reserves in a bid to tighten liquidity is going to be detrimental to our economy. I understand the challenge the monetary authorities face but unfortunately, you cannot plan with one hand.
“The economy is about the fiscal and monetary policies, both must work hand in hand and when they don’t, as they don’t in Nigeria, we will have crises. So, we should focus on fiscal issues so that we can grow our economy out of the challenges we have.”
The benchmark interest rate was increased by 400 basis points to 22.75% by the Monetary Policy Committee of the Central Bank of Nigeria last week.
This information was disclosed by CBN Governor Olayemi Cardoso on Tuesday during the announcement of the first MPC meeting of the year in Abuja.
According to Cardoso, the committee decided to increase the cash reserve ratio from 32.5% to 45% and modify the asymmetric corridor surrounding the MPR from plus 100 to -300 basis points to +100 to -700 basis points.
Since the latest MPC meeting on July 24 and 25, 2023, the MPR has been 18.75%.
Cardoso stated that the most recent MPR adjustment is intended to address the nation’s inflation rate, which stands at 29.90 per cent.
Speaker further Obaseki added, “We should not panic too much because of foreign exchange, we must focus on how we can do things within our economy, how we can grow our economy to earn more foreign exchange. Foreign exchange is our problem, but I believe that creating jobs for young people should be more of a priority for us a people at this time.”
