A financial expert, Mr Okechukwu Unegbu, says the increased Monetary Policy Rate (MPR) of 13 per cent can affect the productive sector of the economy and worsen unemployment.
Unegbu, a past president of the Chattered Institute of Bankers of Nigeria (CIBN), made this known in an interview with the News Agency of Nigeria (NAN) on Thursday in Abuja.
He spoke against the backdrop of the recent decision by the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) to raise the MPR to 13 per cent.
NAN reports that the MPC increased the MPR to 13 per cent at its last meeting after retaining it at 11.5 per cent for over two years.
The CBN governor, Mr Godwin Emefiele, said that retaining the MPR again would have strengthened the perception that the apex bank had abandoned its primary mandate of taming inflation.
According to Unegbu, the CBN is probably trying to encourage the culture of savings by increasing the MPR to 13 per cent.
“But investors have their choices. The banks are not likely to pay that 13 per cent on savings, and government bonds at about five per cent could become unattractive. They will go to the stock market.
“There will also be challenges in terms of lending rates of banks. It will reduce investment and productivity, and could worsen unemployment, ” he said.
Unegbu said that the increase could also worsen inflation.
He called on the CBN to take steps to address the unending depreciation of the Naira as a means of also taming rising inflation.
“I expected the MPC to talk about the Naira and how to stabilise it.
“Raising the MPR, with the continuous depreciation of the Naira, inflation rate could go up from the present 18 per cent, and all the anticipated gains would be lost,.
“Also, increasing the MPR and retaining all other parameters is like tackling only one aspect of the economy. All the parameters should have been considered, ” he said. (NAN)
