Dr Titus Okunrounmu, a former Director, Budgetary Department of Central Bank of Nigeria (CBN), has commended the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) for retaining the Monetary Policy Rate (MPR) at 12.5 per cent.
Okunrounmu commended the committee in an interview with the News Agency of Nigeria (NAN) in Ota, Ogun on Tuesday.
He said that retention of MPR and all other policy parameters by the MPC was meant to maintain stability in the financial market.
NAN reports that the CBN Governor, Mr Godwin Emefiele, announced the retention of MPR while reading the communique at the end of the MPC meeting held in Abuja on Monday.
Emefiele said that the committee also retained the asymmetric corridor of +200/-500 basis points around the MPR.
He said that the committee retained the Cash Reserve Ratio (CRR) at 27.5 per cent and Liquidity Ratio at 30 per cent.
Reacting, Okunrounmu said that the CBN needed to put measures in place to maintain price level stability in the country.
He said that reviewing the MPR downward, with the country financing its budget with deficit, was likely to cause more inflation in the country.
“The Federal Government revenue alone is not enough to finance the budget, so the nation is financing it budget with deficit.
“The nation cannot be financing its budget with deficit and expect that the inflation rate would not go up,” he said.
The former CBN Director said that the Federal Government was borrowing to finance the country’s budget deficit, noting that failure to borrow would cause problems for the economy.
Okunrounmu said that the CBN was trying to manage the situation on the ground by keeping and maintaining price stability.
He said that if the apex bank had reacted to federal government borrowing, the MPR and other policy parameters would have gone up.(NAN)