New Telegraph

Nigeria’s monetary policy devt hampered by external, domestic factors –LCCI

The Lagos Chamber of Com- merce and Industry (LCCI) has disclosed that the na- tion’s monetary policy was influ- enced by external actions and do- mestic macroeconomic factors in the first quarter (Q1) of 2023. The Director-General of LCCI, Dr. Chinyere Almona, explained that the external factors were Russian-Ukraine war, declining oil prices, heightened geopolitical ten- sion, global inflationary pressures and monetary policy tightening in major economies, global capital flight. On the other hand, the LCCI DG posited that the developments on the domestic front included slow economic recovery, persistent inflationary pressure, general election and declining external reserves. Generally, she said interest rates experienced some increase while the naira weakened, and infla- tion consistently witnessed some upward trend during the quarter under review.

On the country’s interest rate, Almona stated: “During the period under review, the interest rates movement in the money market reflected developments in the banking system credit and liquidity conditions. “In furtherance of central bank’s monetary policy stance, the MPR was raised to 18 per cent in March 2023 from 17.5 per cent in January 2023, while the cash re- serve ratio (CRR) and liquidity ra- tio remained at 32.5 per cent and 30 per cent respectively in March 2023. “In addition, the asymmetric corridor around the MPR was retained at +100/-700 basis points. “Further, interbank rate declined by 1.65 per cent points to 10.35 per cent in January 2023 from the previous month, prime lending rate fell by 0.18 per cent points, to 13.67 per cent in January 2023 from 13.85 per cent in December 2022, while maximum lending rate fell by 1.50 per cent point to 27.63 per cent in January 2023, compared with 29.13 per cent a month earlier.” According to her, while the Central Bank of Nigeria (CBN) embarks on monetary tightening to tame inflation, it should ensure that targeted concessionary credit to the private sector is sustained for MSMEs.

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