CBN absorbs pressure in policy implementation
from OKORO CHINEDU in Lagos , Nigeria
LAGOS, (CAJ News) – AN international financial markets watcher has praised the Central Bank of Nigeria (CBN) for defying pressure from some sections of government to tamper with rates during measures the bank took on Tuesday to halt economic recession.
Rand Merchant Bank (RMB) said in the process, despite keeping the policy rate and liquidity ratios unchanged, the CBN delivered a far more focused monetary policy statement, reinforcing the need to allow measures that it carried out in July to take their course.
“The bank did not bow to the pressure from several government agencies to reduce interest rates and instead rebuked the finance ministry for its lack of economic reforms,” RMB stated on Wednesday.
The financial think-tank noted the bank’s Monetary policy Committee (MPC) conceded that it was limited in its capacity to affect gross domestic product growth and noted that monetary loosening would be undesirable in the context of sustained foreign exchange (FX) imbalances and a steep inflation profile.
“We agree and believe that further policy tightening might be in order at its November sitting to arrest the decline in negative real rates and entice foreign portfolio inflows to support FX liquidity,” RMB stated.
Measures by CBN to retain the worthiness of the local currency have elicited mixed reactions.
The Naira has lost value against major currencies in recent weeks, a setback blamed on the recession of the oil sector.
– CAJ News
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