Economy
PROF. Uche Uwaleke, President of the Capital Market Academics of Nigeria says the Central Bank of Nigeria’s (CBN) decision to hike interest rates was anticipated.
Uwaleke, in an interview with the News Agency of Nigeria (NAN) on Tuesday in Abuja, reacted to the Monetary Policy Committee (MPC) decision to increase the Monetary Policy Rate (MPR) by 50 basis points from 26.25 per cent to 26.75 per cent.
NAN reports that the CBN governor, Yemi Cardoso, on Tuesday announced the decision by the MPC to further raise the MPR by 50 basis points.
The committee also adjusted the asymmetric corridor around the MPR to +500/-100 from +100/-
300 basis points.
It retained the Cash Reserve Ratio (CRR) of Deposit Money Banks at 45 per cent, and Merchant Banks at 14 per cent, and also retained the Liquidity Ratio at 30 per cent.
This marks the fourth consecutive hike in the MPR since February, moving the rate from 18.25 per cent to 26.75 per cent.
According to Uwaleke, having done 750 basis points between February and May, I had predicted they would do a minimum of 50 basis points or a maximum of 100 basis points in July.
“It is good that they chose the floor, which is a sign that a complete halt is most likely in their next scheduled meeting in September,” he said.
Uwaleke, however, said that the adjustment of the asymmetric was worrisome.
“The adjustment to the asymmetric corridor around the MPR is a major source of concern.
“The MPC communique did not provide any explanation for increasing the Standing Lending Rate (SLR) from +100 to +500 and the Standing Deposit Rate
(SDR) from -300 to -100.
“By implication, with an MPR of 26.75 per cent, banks will now get loans from the CBN at 31.75 per while they will be remunerated for their excess deposits at 25.75 per cent.
“This will further squeeze liquidity from the banking system and jerk up cost of credit with adverse consequences on output and the equities market,” he said.(NAN)
A.I
July 24, 2024 @ 06:03 GMT|
Tags: Prof. Uche Uwaleke Yemi Cardoso
