Recession: Economists dissappointed as Emefiele, Adeosun disagrees on  way out

The Monetary Policy Committee (MPC) decision not to reduce rates has been greeted with condemnation.

The MPC ended its bi-monthly meeting Tuesday the with decision to retain all key ratios.

This is coming after Finance Minister, Kemi Adeosun in a television interview earlier Tuesday recommended the reduction of the monetary rate as a way out of the present economic recession.

Adeosun’s position agreed with position of various economists wha have recommended the reduction as a stimulus for private sector growth.

Central Bank governor, Godwin Emefiele, while reading the communique to journalists announced that the retention of the rates as follows: Cash Reserve Ratio at 22.5%, Liquidity Ratio at 30% and Monetary Policy Rate at 14% with asymmetric corridor of +200 and -500 basis points around the MPR for standing loans and standing deposit facilities respectively.

The MPC argued that previous attempts to reduce the MPR and support growth had no positive impact as banks decided to patronise more lucrative fixed income market instead.

Responding to the development, former Managing Director of Unity Bank, Rislanudeen Muhammad said the continued attempt by MPC to attack inflation, citing negative interest rate has not impacted on either dealing with inflation or spurring growth.

He said by ignoring positive suggestion of reducing MPR to support growth by the Minister of finance clearly implies the absence of synergy as monetary and fiscal authorities seem to be thinking at cross purposes.

“For me as an Economist and Nigerian, I feel this is a wrong decision and not in tune with fiscal objective of stimulating the economy and pulling it out of stagflation and recession.

“For now, FPIs and other top end investors will continue to benefit from lucrative high yielding investments in Nigerian fixed income market especially bonds and treasury bills whose rates are tied to MPR.”

The Harvard trained economist advised Nigerians to tighten their belts harder as they adjust to the country’s economic realities.