Time not ripe to relax interest rates, CBN told

Foremost economic analyst, Dr. Paul Alaje yesterday told the Central Bank of Nigeria (CBN) that now is not the time to relax the Monetary Policy Rate (MPR). “I think the central bank is making some very good policies. This time, I only hope that some of those policies will be sustained. For instance, relaxing MPR […]

Foremost economic analyst, Dr. Paul Alaje yesterday told the Central Bank of Nigeria (CBN) that now is not the time to relax the Monetary Policy Rate (MPR).

“I think the central bank is making some very good policies. This time, I only hope that some of those policies will be sustained. For instance, relaxing MPR shouldn’t be now,” Alaje stated in a television interview monitored by our correspondent.

The MPR represents the interest rate officially approved by the apex bank for lenders.

At the last Monetary Policy Committee (MPC) meeting, the CBN retained interest rates at 27.5 per cent as part of measures to moderate inflation.

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However, micro, small and medium enterprises (MSMEs) have called for a single digit interest rate, saying the current double-digit rate is not sustainable for businesses.

However, Alaje is of the view that now is not the time to relax the interest rates because of the current inflation rate.

He said, “We may need to wait a bit more, especially because some of the inflation numbers we are seeing are outliers. I didn’t say they are lies. I’m saying they are outliers. Because they are two different things.

So, we need to wait to have a full year cycle, which is what I said the first time, before we can consider easing the rate or not.”

‘Political activities pose danger to forex market’

Alaje also warned of the dangers of early political campaigns for the 2027 general election. He said reckless handling of foreign exchange could deepen the economic woes.

According to him, the behavior of politicians “will determine whether we are going to have another great four years or another horrible four years.”

He stated that any abuse of the foreign exchange could trigger naira volatility and erase recent gains in stabilizing the economy.

“And this is what I want President Tinubu to do. Warn politicians, all inclusive, from federal to local government, no exchange of foreign currency, to delegate or for whatever.

“The little sign of positivity that we are seeing will evaporate overnight. Honestly, because when anything happens to exchange rates, don’t believe me. Believe the Bureau of Statistics.

“80% of all imports, I mean, final goods, 80% of all final goods are imported to Nigeria. When you make exchange rates scarce because we are using them for elections, I tell you, people might tell you that things will be better soon. Look at how long it has taken us.

“From 2015, we are beginning to see some little sign of a difference. I hope, because we still have a long way to go. Before this impacts people, which is what many people might be asking me on air, that when do you think, at least if it continues like this, you might start seeing some changes in three to four years, provided that 2027 elections, starting with next year, there are not too much, or there is no distribution of foreign currency.”