In a bold critique of recent decisions by the Monetary Policy Committee (MPC), Peter Obi, the Labour Party’s presidential candidate in the last general election, expressed deep concern over the committee’s move to increase the Monetary Policy Rate (MPR) to 22.5% and the Cash Reserve Ratio (CRR) to 45%. Obi believes this decision will exacerbate the economic challenges faced by many Nigerian households.
Highlighting the potential repercussions, Obi argued that tightening liquidity in the financial system, as suggested by the MPC, would prove counterproductive. He particularly emphasized the negative impact on job losses, especially in sectors like manufacturing that heavily rely on bank loans and credit facilities.
The MPC’s decision, as reported by DAILY POST, involved a significant 400 basis points increase in the benchmark interest rate to a historic 22.75%. Olayemi Cardoso, the CBN Governor, made this announcement during the communiqué of the first MPC meeting of the year.
Taking to his social media handle, Obi expressed his disagreement, stating that such monetary measures wouldn’t enhance productivity, especially in essential sectors like food production – a key contributor to inflation in Nigeria. He contended that the government should focus on addressing the prevailing insecurity in the country to effectively tackle inflation and boost production.
Obi proposed that addressing security concerns would lead to increased food and crude oil production, fostering an overall rise in productivity. This, he argued, would result in cheaper products, particularly in the food sector. He cautioned against relying solely on classical economic theories and emphasized the need for practical strategies to restore confidence in both domestic and foreign investments.
In conclusion, Obi stressed that the Nigerian economy requires pragmatic and original solutions. Mere adjustments to economic theories, he warned, could deepen the existing crisis. As the nation grapples with economic challenges, Obi’s insights advocate for a comprehensive approach that goes beyond traditional monetary policies.
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