By Oludare Mayowa
Against the backdrop of rising inflation, the Central Bank of Nigeria (CBN) monetarists decided to hold its benchmark interest rate at 11.5 percent and all the parameters at the same level.
At the end of its 2-day meeting in Abuja, members of the Monetary Policy Committee (MPC) voted to retain Monetary Policy Rate (MPR), citing inflation concerns.
The National Bureau of Statistics (NBS)Â had last week reported a higher inflation rate of 17.33 percent for February, up from 16.47 percent the previous month.
Analysts have expressed the dilemma of the regulatory bank’s monetarist in dealing with the issue of interest rate in the face of surging inflation and amid downturn in economic growth.
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The bank cut rates twice last year to try to stimulate an economy that has been hobbled by the COVID-19 pandemic and an oil price crash.
The bank is facing the challenge of stimulating growth at the same time as trying to curb double-digit inflation while also propping up the ailing naira currency, hit by lower oil receipts.
The CBN governor, Godwin Emefiele said the monetarists were divided on the direction the interest rate should go, but the majority have their way in retaining the benchmark rate and other parameters.
Increasing the lending rate should aim primarily at reducing money supply in the economy, a key tool in fighting inflation.
However, doing so can slow economic growth at a time the country has just exited a recession, with businesses not able to borrow much to fund their operations.
