The Central Bank of Nigeria is unlikely to reduce the benchmark interest, investigation has shown.
Experts, however, disagree with this position.
Also, as economic recession continues to
hit the country, there are indications that more companies will lay off
workers by year end.
Findings by our correspondent on
Thursday revealed that the CBN Governor, Mr. Godwin Emefiele, and his
team were not ready to yield to calls for interest rate cut by experts.
It was learnt the CBN governor believed,
among other things, that an interest rate cut might not necessarily
translate to more lending to companies by banks.
Sources at the CBN said Emefiele
notwithstanding fresh calls for interest cut, was not ready to change
his position on the matter.
At the annual Bankers’ Night last Friday, the CBN governor had argued against interest rate cut.
He said, “For those who say we need a
rate cut to spur growth, we need to remind them that high inflation is
inimical to economic growth. Indeed, many empirical studies have
estimated the threshold level at which inflation becomes growth
retarding to be 11 per cent for developing countries. With ours at 18.3
per cent, one must question the judgment of cutting interest rates at
this time.”
However, economic experts said unless
the CBN reduced interest rate in line with the capital injection by the
Ministry of Finance, the economy would continue to experience slow
growth.
The Chief Executive Officer, Financial
Derivatives Limited, Mr. Bismarck Rewane, said, unless the Monetary
Policy Rate was reduced, the economy would continue to face challenges.
He said, “The policies have to
complement one another. The fiscal policy is moving in the right
direction, but it is not enough. We need increased stimulus and
increased injection. But we cannot do this with the current level of
interest rates.
“Therefore, something has to happen to
bring the interest rates down. The monetary policy has to be consistent
with the fiscal policy, or else we will continue to have contraction.”
The Chief Executive Officer, Cowry Asset
Management Limited, Mr. Johnson Chukwu, said there was a need to inject
liquidity into the local economy by reducing the benchmark interest
rate, and inject liquidity into the forex market by accessing forex line
from the International Monetary Fund to stabilise the naira exchange
rate.
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