Analysts at Comercio Partners have called on the Central Bank of Nigeria (CBN), “to pay more attention to strengthening the transmission mechanism to make monetary policy more effective.”

The analysts stated this while reacting to the Monetary Policy Committee’s (MPC) decision, at its meeting last week, to increase Monetary Policy Rate (MPR) by 50 basis points to 27.25 per cent.

According to the analysts, while further monetary policy tightening by the CBN indicates that the apex bank is committed to reining in inflation, “previous interest rate hikes have not yielded the desired results.”

As the analysts put it, “the Central Bank of Nigeria’s (CBN) recent actions clearly prioritise inflation control over economic growth.

While this approach might seem prudent on paper, given the persistent inflation, there is a need to question the effectiveness of these policies, especially since previous interest rate hikes have not yielded the desired results.

“Results from a regression analysis show that Nigeria’s inflation and interest rates tend to have a positive and significant relationship. Therefore, we opine that the CBN should pay more attention to strengthening the transmission mechanism to make monetary policy more effective.”

New Telegraph reports that in his address at the Chartered Institute of Bankers of Nigeria (CIBN) annual dinner in November, last year, CBN Governor , Olayemi Cardoso, who had assumed office two months earlier, said he and his team had, “spent time fixing the transmission mechanism to ensure the decisions of MPC meetings actually result in desired objectives.”