The Monetary Policy Committee (MPC) is billed to hold its second meeting for the year next week and there are indications that the benchmark interest rate would further be hiked as the Governor of the Central Bank of Nigeria (CBN), Dr Olayemi Cardoso, voted for the highest increase in rates at the last meeting.
The decision at the February meeting which was the very first to be conducted by Cardoso since his appointment in September last year, is a move away from the desire of President Bola Ahmed Tinubu that interest rate be reduced to allow small businesses increased access to cheap funding.
Cardoso, in his statement at the last MPC meeting, had voted to increase the benchmark interest rate to 23 per cent as against the 22.5 per cent that many of the MPC members voted for, the highest rate thus voted at the meeting.
His basis for increasing rate is to curb the spiraling inflation in the country and further drive investments in the country. Inflation rate in the country which has refused to abate had spiked to 31.7 per cent in February further giving reasons for a hawkish monetary policy.
The CBN governor had noted that the post-COVID-19 fiscal support and subsequent deficit financing have created a lax financial environment, culminating in surplus liquidity within the banking system.
previous post
