The decision of the Bankers Committee to speak in one voice with the new leadership of the Central Bank of
An indication that the new Governor of the
It noted there were many impediments to any immediate decision to lower the interest rates. The committee listed some of the impediments to any country's interest rate regime to include rate of inflation, type of exchange rates desired, the cost of funds of the banks, cost of providing infrastructure and cost of providing personnel. The CBN, the committee said, found the current interest rate environment suitable, if not the most desirable. Managing Director,
Same Agenda, Same Timing Money market analysts that dissected the position of the bank chiefs said there was no difference between the direction of the new governor of the apex bank on interest rate reduction, considering the fact that Emefiele had made it clear that the planned reduction will be implemented at a later date, precisely after the 2015 general elections. The CBN helmsman, had at his maiden media parley earlier in the month, noted that
Emefiele had told THISDAY that the plan he enunciated during his maiden media briefing was not intended to rock the boat, explaining that the apex bank will be on top of the situation to ensure that when the rate cut eventually begins, the market would have really prepared for it. It was gathered that the assurance from the apex bank governor had doused initial tension that greeted the unveiling of the governor's agenda and it had also gone a long way in reducing volatility in the market. They also helped the naira to recover some losses triggered after Emefiele had said at his inaugural press conference that he would seek to gradually lower interest rates, which the market took as an indication that a rate cut could come soon. "The market has also calmed since the new central bank governor made the clarification on his plan to gradually reduce interest rates, which was one of the reasons the market was jittery previously," one dealer said.
His decision to lower interest rates signals a departure from the hawkish monetary stance of his predecessor, Sanusi Lamido Sanusi, who kept the Monetary Policy Rate (MPR) unchanged at 12 per cent for two years and cut inflation to single digit. Speaking at a press briefing in
Pressure from Real Sector Operators Trade groups such as the
On paper, there are several funding options available to a Nigerian business person who wants to set up a new business or expand an existing one. For instance,
Rate Cut Not Now But in his attempt to defend the banks' position, Agbaje said all the components as well as the macro-economic factors of a country come into what ultimately determines the cost of fund before the banks can determine or charge interest rates. According to him, it is illogical to have an interest rate that is lower than the level of inflation in view of the various macroeconomic implications for the country. He, however, insisted that as the country continued to deal with issues as interest rates and import substitution, Nigerians would start to see interest rates considerably move downwards. Agbaje pointed out that with price stability at the fore front of the new leadership at the CBN; it meant that exchange rate stability was an initiative that would be sustained. Noting CBN's effort to keep inflation at a single digit, Agbaje said in order to sustain macroeconomic stability, all the monetary policies should ensure that
He said: "The current interest rate environment is not the most desirable. So where we are today and what I would consider the short to medium term is one in which interest rates are likely to stay where they are."
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