The Central Bank of Nigeria, CBN, Governor, Godwin Emefiele, on Tuesday, September 20, shunned the Minister of Finance, Kemi Adeosun, as he refused to adhere to the advise to reduce rates.
It could be recalled, that the Minister of Finance, had earlier on Tuesday, urged the Monetary Policy Committee, MPC, of the CBN, headed by Emefiele, to cut interest rates, in a bid to make it easier for the Federal Government to take loans for the purpose of stimulating the economy.
She said, “As you know, the Monetary Policy Committee is meeting today, and my position has been, look, this government is spending its way out of trouble, and that spending, much of it is being borrowed.“So if you increase the interest rates, you increase our cost of debt service.”So we would love to see the MPC consider how they can help us lower interest rates”, Adeosun noted.
Despite Adeosun’s plea, the Committee had after much deliberation, opted to maintain benchmark interest rates at record-high, intensifying its battle against inflation.
Emefiele, who made this known at the CBN headquarters in Abuja, said the Committee decided that Monetary Policies alone, could not totally save the economy and therefore, it is calling for the fiscal side of government to complement its policies.
According to Emefiele, the MPC voted to keep interest rates at 14 percent, Cash Reserve Ratio, CRR, and liquidity ratio at 22.5 percent and 30 percent, respectively.
The Governor, explained that the CBN decided to retain the rates, having considered that cutting rates, without appropriate fiscal plans, has not improved the economy, thereby, reiterating the need to reposition the fiscal side to fasten the budget-implementation process.
Post-Nigeria however, gathered that the implication of the decision, will continue to mount pressure on manufacturers, as they will have no option, but to continue to close down, due to their inability to acquire loans at minimal interest rates.
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