Former Central Bank of Nigeria Research Director, Dr. Titus Okunrounmu, has expressed skepticism about the effectiveness of the continuous increase in the Monetary Policy Rate (MPR) by the bank’s Monetary Policy Committee (MPC) in stimulating economic growth.
In a recent interview with the News Agency of Nigeria, Dr. Okunrounmu criticized the decision to raise the MPR from 22.75% to 24.75% following the MPC meeting in Abuja. He argued that the escalating MPR, which represents the short-term rate at which banks lend to each other, would deter borrowing due to the high interest rates.
Dr. Okunrounmu highlighted that the MPC’s reliance on data for decision-making was not translating into economic growth, as businesses and individuals were reluctant to borrow at such exorbitant rates. He emphasized the need for a more conducive lending environment to stimulate economic activity.
Moreover, Dr. Okunrounmu urged the government to utilize borrowed funds from the CBN for productive capital projects, given the high cost of borrowing. He also called for increased efforts in diversifying the country’s power sources to enhance productivity in the industrial sector.
Stressing the importance of stable power supply, Dr. Okunrounmu emphasized that it would boost local production, increase exports, and reduce pressure on the currency. He noted that these measures would contribute to lowering inflation rates and stabilizing the foreign exchange market.
In conclusion, Dr. Okunrounmu’s insights shed light on the complexities of monetary policy decisions and their impact on economic growth. As global economies navigate uncertain times, his perspectives offer valuable considerations for policymakers and stakeholders alike.
By: Media Talk Africa
Keywords: Central Bank of Nigeria, Monetary Policy Rate, Economic Growth, Monetary Policy Committee, Interest Rates, Borrowing, Capital Projects, Power Supply, Inflation, Foreign Exchange.
