Lagos – An international finance house has
expressed mixed feelings to measures the Central Bank of Nigeria (CBN) has
adopted to resuscitate the economy.
Rand Merchant Bank (RMB), in its latest Global Markets
Update released on Wednesday, noted in a somewhat surprising move, the CBN
tightened its grip on monetary policy by amending some metrics fundamental to
CBN increased policy rate (MPR) and Cash Reserve
Requirement (CRR) while the liquidity ratio was retained.
“The monetary policy outlook is shrouded in uncertainty.
Though encouraged by yesterday’s tightening, we are concerned that a lack of
policy coordination will keep the CBN in a state of flux,” RMB stated in
reaction to the CBN moves.
RMB said there looked to be little opposition to the
CBN’s turnabout from the accommodative stance that it adopted in the last
quarter of 2015.
Also read: Eke rejects call to devalue Naira
The bank argued the CBN’s sudden change of heart was the
result of rampant inflation which registered a three-year high of 11,4 percent
“Yet, the committee’s actions are rather puzzling
considering that it lowered interest rates at its gathering in November 2015,
despite a quickening in headline CPI (consumer price index).”
The MPC, RMB
stated, and more particularly, the governor, appear to have abandoned the
notion that the central bank has the ability to stimulate demand growth without
the attendant fiscal and structural policy changes.
“The communique (on Tuesday) stressed the need to
sustain, deepen and speed up reforms designed to ensure focused coordination of
monetary and fiscal policies, but experience tells us that this is likely to be
a measured process.”
CBN is under pressure to retain the value of the Naira,
which is on a freefall against major currencies owing to prevailing economic
- CAJ News