According to the Central Bank of Nigeria, the decision to raise the monetary policy rate was made in order to rein in growing inflation.
Hassan Mahmoud, the director of the CBN’s monetary policy department, made this statement on Wednesday during a post-MPC conference titled “Unveiling Facts behind the Figures.”
The MPC raised the MPR by 150 basis points, or from 14% to 15.5%, at its 287th meeting on Tuesday.
The MPR serves as the foundational interest rate for an economy, upon which all other interest rates are based.
The move, according to CBN Governor Godwin Emefiele, was motivated by the economy’s shaky growth and the inflation rate’s ongoing increase.
Mahmud claims that the MPC has reached a point where drastic action is needed to rein in inflation.
He claimed that in making its policy decisions, the committee considered both local and global economic factors.
“We raised the MPR because it was necessary. The economy couldn’t handle the amount of money in the system, he claimed.
He added that the purpose of using monetary policy tools to address short-term risks was to raise the cost of borrowing in order to lower inflation.
Mahmud claims that the COVID-19 stimulus packages that national governments offered to their populations improved their purchasing power and posed problems for the world’s supply.
“A lot of households and small businesses were injected with stimuluses; the U.S did two trillion dollars, Nigeria did about five trillion Naira, these increased the ability of people to spend.
“But the supply side could not meet up with the demand because that volume of injection was far more than the regular intake for those economies, this made prices to go up,’’ he added.
He also cited the Russian-Ukrainian conflict and COVID-19’s revival in China as contributing factors to the upward trend in global inflation.
“That region accounts for more than 50 per cent of global commodity supply and 38 per cent of global oil and gas supply.
The war resulted to some shortages which made prices to go up. Then the COVID-19 lockdown in China. The country is the largest importer of commodities across the globe,’’ he said.
Approximately nine trillion Naira had been invested in the various development finance interventions, according to Dr. Yusuf Yila, director of the Development Finance Department, who was speaking about the apex bank’s various economic intervention initiatives and the likelihood of recovering the funds.
The money would all be retrieved, he assured them.
Yila claims that out of the N9.3 trillion invested in various development finance measures, N3.7 trillion has been reimbursed.
“Most of the loans are still under moratorium, especially those in manufacturing. Manufacturing forms the largest part of our portfolio, about 31 per cent,’’ he said.
The Commercial Agriculture Credit Scheme, he claimed, had one of the best results of all the interventions, with roughly N700 billion of the N800 billion in loans having been returned.
Yila said that N400 billion of the Naira one trillion Naira in loans to smallholder farmers made through the Anchor Borrowers Programme, the government’s major agriculture intervention program, have been recovered so far.
He asserts that the department will initially limit action to crucial industries like SMEs and the electrical sector.
Director of the Trade and Exchange Department, Mrs. Ozoemena Nnaji, commented on the devaluation of the Naira and said the apex bank was acting to strengthen the currency.
According to Nnaji, the CBN’s supply of cash cannot keep up with demand for foreign exchange.
