Foremost economist, Bismarck Rewane, has said the Monetary Policy Committee, MPC, of the Central Bank of Nigeria, CBN, must meet more than four times annually to stem rising inflation.
Rewane, who is the Managing Director of Financial Derivatives Company Limited, stated this in an interview with Channels Television’s Sunrise Daily.
He said: “The monetary policy committee is an independent committee which is made up of people from the central bank and outsiders and they meet every two months to reflect on what the monetary policy is and make decisions which will affect the monetary policy in the economy — high-interest rates, money supply and inflation.
“Now, I respectfully disagree with the governor when he says the minimum number of times they have to meet is four. The minimum number of times is not the maximum number of times.
“Since July when the committee met last and now which is seven months, the inflation has increased by almost five to six percent; it’s almost 30 percent. So, in times like this, you have to meet more often as a matter of fact you burst all the the frontiers and meet more times to address the issues.
“So, now that there’s going to be a meeting in February, I think that they will have to do the right thing.
“The first thing is that they will have to address what is causing inflation. Inflation is caused by so many factors: money supply, the price of diesel, exchange rate pass through… all of these things have to be addressed while at the same time ensuring that you complement the fiscal policy of the country to ensure that there’s macroeconomic stability.
“I think that’s the main cost. The expectations that we are going to see about anything at least 150 basis points to 200 basis points this time but the consensus, according to Bloomberg, is that for the year of 2024, we are going to see interest rates increase by about 300 to 400 percent in this period. That is what Bloomberg is saying after talking to economists.
“Having said that, you must understand that increasing the MPR itself is not enough, there must be a complete, the effective interest rate in the economy must increase — one to rein in money supply, and two, to stabilise the naira.