The Lagos Chamber of Commerce and Industry (LCCI) has commended the Central Bank of Nigeria (CBN) for reducing the Monetary Policy Rate (MPR) by 50 basis points from 14 per cent to 13.5 per cent. Its Director-General, Mr. Muda Yusuf in a statement said the action aligned with the clamour of the private sector.
He said the private sector had canvassed for a relaxation of the tight monetary policy regime in the light of weak consumer demand, fragile economic growth and high rate of unemployment.
Yusuf argued that though the reduction is not materially significant, it however, it is the appropriate policy choice at this time. He said the economy is currently characterised by fragile growth at 2.3 per cent; unemployment at 23 per cent and youth unemployment at 36.5 per cent.
Others he noted are high dependence on crude oil export; weak diversification and high poverty incidence. He maintained that the economy needs both monetary and fiscal stimulus at a time like this.
He said: “Although, the major monetary policy instruments of Cash Reserve Ratio (CRR) and Liquidity Ratio are still high at 22.5 per cent and 30 per cent respectively are still high and in tightening mode, the reduction in the MPR has a symbolic and signaling significance. We expect that other monetary instruments will be adjusted over time”.
He subscribed to the new policy by insisting that economic policies are typically characterised by tradeoffs and policy choices driven by what is utmost economic objective at a given point in time. He added that the priority at this time is to stimulate growth.
He also advised on the need to address the mis-alignment between the banking system activities, stimulation of economic growth and promotion of economic inclusion.