The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) that will hold today will be a different one.
Nigerians now have a vested interest in the decision of that committee, especially as it concerns how Naira notes will become more accessible.
In fact, like spectators of a football game, from the sidelines, Nigerians are of the opinion that the MPC should quickly address the cash shortage affecting the economy.
This is against the backdrop of the 290th meeting of the MPC which is scheduled to hold between Monday and Tuesday.
The sufferings of Nigerians under the current scarcity of cash situation makes it imperative for the MPC to discuss the matter urgently
Forecasting what the issues on the table would be Financial analyst, Muktar Muhammed, says it is important that the CBN explains to Nigerians the reasons Naira notes are still scarce.
A former president of the Chartered Institute of Bankers of Nigeria (CIBN), Okechukwu Unegbu, said the apex bank’s claim of circulating more than ₦900 billion did not reflect on the Nigerian economy.
According to him, the problem should ameliorate, as elections have been concluded.
“Our biggest challenge presently is the cash situation, and I think the committee should discuss it urgently.
“The CBN says it has over ₦900 billion in the system, but it is not reflected because cash is still scarce.
“But I believe that with the elections over, cash will start to circulate,” he said.
He urged the committee to also address the “rumblings in the economy’’ in terms of inflation and exchange rates.
On the policy rates, Unegbu advised for retention of all existing parameters until the next meeting.
“I suspect that because of rising inflation, which is now 21.91%, according to the National Bureau of Statistics (NBS), the MPC may be tempted to raise the rates again.
“But my suggestion is that all the rates should be held constant to allow the MPC to study the situation until its next meeting,’’ he said.
Unsustainable Way To Tackle Inflation
According to Uche Uwaleke, a Professor of Capital Market at the Nasarawa State University, Keffi, the use of cash scarcity to stifle demand is not a sustainable way to tackle inflation.
Uwaleke said that such a step could hurt economic growth and could lead to the loss of jobs, thereby, fueling unemployment.
“Going forward, the CBN should ensure that measures are put in place to ease the cash crunch while gradually implementing its cashless policy.
“Inflation rate rose from 21.82% in January to 21.91% in February, the economy witnessed a slight downward pressure in the general prices of commodities.
“This may not be unconnected with the cash scarcity which resulted in low demand for goods and services in view of the cash-based nature of the Nigerian economy.
“Recall that as a result of the cash scarcity and low demand, many traders who deal in perishable items were forced to sell them at below purchase price or cost of production due to lack of storage facilities,’’ he said.
It would be recalled that at its last meeting in January, MPC increased the Monetary Policy Rate (MPR) by 100 basis points from 16.5% to 17.5%.
It, however, retained the asymmetric corridor of +100/- 700 basis points around the MPR, the liquidity ratio of 30%, and the cash reserve ratio (CRR) of 32.5%.
