Edo State governor Obaseki criticises CBN's new monetary policy

Edo State Governor, Godwin Obaseki, in a speech as a guest speaker at the annual dinner of Edo Zone Bankers Committee, has criticised the Central Bank of Nigeria's decision to raise the Monetary Policy Rate by 22.75%.

The governor stressed that the decision by the CBN fails to address the current economic challenges faced by the country.

He recommended enhancing local production to satisfy domestic demand for goods and services.

“I understand the monetary rationale for increasing MPR, but fundamentally and fiscally, it is not going to lead to growth in our economy.

“We must focus on the fundamentals which is increasing production, making sure our citizens produce the goods and services we consume and depend less on import.

“Our economic policy and monetary policy cannot be determined by exchange rate alone. So, this whole issue of increasing the cash reserves in a bid to tighten liquidity is going to be detrimental to our economy. I understand the challenge the monetary authorities face but unfortunately, you cannot plan with one hand," Obaseki said.

The governor continued, "The economy is about the fiscal and monetary policies, both must work hand in hand and when they don’t, as they don’t in Nigeria, we will have crises. So, we should focus on fiscal issues so that we can grow our economy out of the challenges we have.”

Obaseki concluded, “We should not panic too much because of foreign exchange, we must focus on how we can do things within our economy, how we can grow our economy to earn more foreign exchange. Foreign exchange is our problem, but I believe that creating jobs for young people should be more of a priority for us at this time.”

The CBN’s Monetary Policy Committee had on Tuesday, February 27, 2024, raised the benchmark interest rate by 400 basis points to 22.75%.

The CBN Governor, Olayemi Cardoso, who disclosed this during the announcement of the first MPC meeting of the year in Abuja, said the MPR adjustment is aimed at tackling the country's inflation rate which stood at 29.9%.

Cardoso said the committee voted to adjust the asymmetric corridor around the MPR to +100 to -700 from +100 to -300 basis points. The committee also raised the cash reserve ratio from 32.5% to 45%.