Esili Eigbe: CBN Should Call Emergency MPC Meeting, Raise Interest Rate

A Director of ESCAP Management, Esili Eigbe, has said that the governor of the Central Bank of Nigeria, Olayemi Cardoso, should call an emergency Monetary Policy Committee (MPC) meeting to increase the bank’s interest rates.

The director also said that the Central Bank’s reforms on the Forex market, although good, came later than they should have.

In an interview with ARISE NEWS on Tuesday, Eigbe said that despite the Central Bank’s reforms, there is still a lot that they can do to stabilise Nigeria’s economy and naira devaluation.

He said, “Based on the measures they’ve taken to try and address this, I think that we will start to see some improvement, but I don’t think it’s enough. I think that there is still a lot more that the Central Bank can do.”

He said that the reforms are coming later than they should have as the apex bank has “possibly lost control” of the Naira at the moment.

Giving his opinions on what could be done, Eigbe said, “Interest rates should be a lot higher. I’m of the belief that the Central Bank governor should have called for an emergency MPC meeting, to raise interest rates.”

He said this needs to be done so that local and international investors could be given the confidence that the apex bank knows what they’re doing to boost the naira and Nigeria’s economy.

He said, “You need to be at levels that are globally competitive to attract the kind of capital that you need to sort out a lot of the FX deficits that they currently have.”

He said that looking at the state of the market, it has seemed like the Central Bank has wanted to increase interest rates, but it has always been a matter of when.

“With respect to the concerns around when are they raising interest rates, it seems to me that he was trying to get his house in order, put together a proper team in the MPC, so that whenever they do make that decision of where rates are going to go, he would be credible. So, we wait to see that perhaps on the 26^th, but if it were me, I would be calling, perhaps, for an emergency MPC meeting to move the rate higher.”

Eigbe then addressed the situation where Cardoso said that $2.4 billion out of the $7 billion of the CBN’s FX forwards obligations are invalid, saying that the CBN had written to those organizations to justify their order and they had not done so to their satisfaction.

He said, “It means that perhaps the right documentations were not presented, perhaps the purchase were for the wrong types of products and services, issues around that I suspect. But they’ve been written to and been asked to come and justify the FX that they had ordered, and again, to the Central Bank’s satisfaction, they couldn’t do that.”

He further said, “What the current Central Bank governor is doing is trying to bring a lot more transparency to the FX market, and he does seem like he is really concerned about credibility. 

“You heard his statement about taking his time to organise or announce the first MPC. He did harp on the fact that the MPC needs to be credible, which is a big shift from the previous Central Bank governor. The market needs to be able to take the word of the Central Bank to the bank and react accordingly.”

Ozioma Samuel-Ugwuezi

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