The Central Bank of Nigeria at its first monetary policy committee meeting for the year 2023 increased its monetary policy rate by 100 basis points from 16.5% to 17.5% while maintaining a hold on other parameters as it battles to keep Nigeria’s soaring inflation under checks.
Mixed reactions have trailed the announcement by the Godwin Emefiele-led team with experts alluding that the country’s economic managers must look beyond monetary tools to curb rising inflationary pressures in the country.
According to Ibrahim Shelleng, Financial Analyst and Business Advisory expert, monetary policy has become ineffective in tackling Nigeria’s inflation due to the nature of inflation being experienced in the country.
He further states that “we have cost-push inflation caused by the rise in production costs caused by structural issues i.e. poor infrastructure, inadequate power, bad roads among others. As we tend to import most things we consume, the devaluation of currency also makes the cost of goods increase”.
Shelleng is of the view that raising interest rates which translates to restricting the money supply does little in curbing inflation.
Conversely, the Chief Executive Officer at Emmab Global Concept, Dr Emmanuel Idenyi Shaibu says the unexpected move by the Central Bank of Nigeria to raise the monetary policy rate will bring about stability with rising inflation as less cash will be in circulation.
He added that the apex bank should be mindful of the private sector in its decision making process due to the major role they play in Nigeria’s economy to avoid crowding out effect.
The National Bureau of Statistics in its inflation report for December 2022 revealed that Nigeria’s annual inflation rate eased to 21.34% in December of 2022, down slightly from a 17-year all time high of 21.47% in November 2022.
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