The CBN has started making proactive moves to address the envisaged excess liquidity in the financial sector and maintain a single digit inflation rate.
The apex bank this week increased the Monetary Policy Rate (MPR) from 8.75 to 9.25 per cent, after the meeting of the Monetary Policy Committee in Abuja on Tuesday.
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The CBN Governor, Malam Sanusi Lamido Sanusi, said that the rationale behind the action was to check inflation which might arise from the implementation of new minimum wage of N18,000.
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He said that the CBN also needed to maintain a single digit inflation rate, while stabilising the foreign exchange rate.
Some financial experts commended the measure, saying that it would help in stabilising the economy.
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Mr Ayodeji Fagbenle, the General Manager of Cash Craft Assets Management Ltd., however, said that the increase in the benchmark would force many banks to demand higher lending rates.
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“The continued upward review of the benchmark would make access to loans difficult for investors and cause adverse effects on the real sector,” he said.
Fagbenle said that Nigerian manufacturers are at a disadvantage, compared to their foreign counterparts, because the costs of doing business in Nigeria would be higher.
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He stressed that the increase in the benchmark would discourage investors from taking bank loans. (NAN)
“No investors would be willing to borrow at a high rate, unless the returns on the investment are quite high,” he said.
Also, the Assets Management Corporation of Nigeria (AMCON) announced plans during the week to inject additional N800 billion to further stabilise the five distressed banks that were rescued from becoming bankrupt.
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The Chairman of AMCON, Mr Chike Obi, said that the measure was necessary to revive the banks and restore their profitability.
However, Mr Titus Okunronmu, a former Director of CBN, said that for the N800 billion-lifeline to impact positively on the rescued banks, tangible efforts should be made to monitor how the funds were used.
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“If the issue of regulation is not seriously looked into by the Central Bank, no amount of money injected into the financial sector will improve the banks’ liquidity ratio,” he said.
Okunronmu, nonetheless, called on AMCON to be transparent and accountable in the disbursement of the bailout funds to the five distressed banks. (NAN)
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