Government considers new MPC members as uncertainty threatens economy

• Membership may be disbanded or reorganized.
• Cardoso will readjust CBN calendar, CBN sources say.
• Announce policy direction at this week’s Bankers Dinner
• Naira faces new crisis as market uncertainty increases
• Experts are concerned about the governor’s silence on important issues.

The Central Bank of Nigeria (CBN) was absent from its interest rate-setting Monetary Policy Committee (MPC) meeting for the second time in a row, sparking speculation about Olayemi Cardoso’s strategic policy direction, approach to controlling inflation, and even its current composition. There is still room for. of the arm.

This comes as the central bank is said to have cut off communication with external members of the committee expected to generate research-based market trends for monetary policy decisions.

One member who spoke to the Guardian yesterday said there had been no formal or informal communication with colleagues since the new government took office.

“There’s so much uncertainty, no one knows what’s going on,” he said. The official said the body language of the new administration suggests it wants some change, but the apex bank is unsure how to proceed with it as the law provides for a removal process. He said that it remains unclear.

Apart from independent members, it is represented by the Department of the Treasury, the Securities and Exchange Commission, and the Office of the President. The fate of the current independent MP depends on Adeola Adenikinju, a professor of economics at the University of Ibadan. Mike Obadan, another economics professor. Aliyu Sanusi from the Department of Economics at Ahmadu Bello University and Robert Asogwa, a macroeconomist at the African Development Bank (AfDB).

Others include Mohamed Adaya Salisu and Mo Omamegbe. Last year, five appointees were renominated and two new appointees were confirmed by the Senate under Section 12(4) of the CBN Act, which guarantees the tenure of appointees. They had previously come under scrutiny by the Senate Committee on Banking, Insurance and Other Financial Institutions.

Recall that the CBN has been facing leadership challenges in recent months with Mr. Emefiele and four of his councilors resigning before the end of their terms. The Guardian reported that the agency’s leaders face an uncertain future as they remain determined to carry out the “housecleaning” promised by the president.

The MPC, considered the apex body responsible for monetary policy and legally chaired by the CBN Governor, is a division of the CBN that draws members from top banks and non-regulated professionals.

MPC decisions were determined by voting, but the Governor is believed to have overwhelming influence over the voting patterns of its members, so the arrival of the market is expected to raise interest rates and the financial It is considered an important factor that can change the restriction stage. From 11.5% to 18.75%, fueled by the cost of commercial borrowing.

Months into the monetary tightening campaign, former dovish CBN Governor Godwin Emefiele has vowed that he will not commit to ending the monetary policy unless there is a rational breakthrough in the anti-inflationary war. Stated. A July meeting presided over by Foroshodun Shonubi, who briefly headed the bank’s leadership team, raised the benchmark interest rate by 25 basis points to 18.75%, a level not seen in recent history. became.

The last meeting was a key test of the CBN’s autonomy after President Bola Tinubu said in his inaugural address that he was committed to affordable interest rates as part of his plan to reboot the economy and grow a credit-driven economy. It was considered.

The circumstances surrounding Mr. Cardoso’s appointment also called into question his courage to defend his own man. The market will therefore be watching to see how he deals with issues, especially around interest rates (which Tinubu believes are too high) and the CBN overdraft.

The September meeting took place during a notorious leadership vacuum in which Cardoso was rushed into office following an urgent request to fill the seat. Some market analysts had expected the MPC to be held a week or two after he took power, but that did not happen. This was an opportunity to tell you about the last meeting of the year, which took place yesterday and today. It has reportedly been postponed, but no official announcement has been made.

An apex bank official told the Guardian yesterday that this is not a postponement but merely an adjustment of events at the CBN. Sources hinted that the new helmsman, who has plans for the new CBN in mind, will seize the moment at Bankers Night, the annual event organized by the Chartered Institute of Bankers of Nigeria (CIBN), to be held this weekend. Ta. Make bold statements and clarify key policy directions.

Sources told our correspondent that the CBN prepares a calendar of major events and activities every year, the sources explained. However, there is nothing sacred about the date, the source explained, and promised that the MPC would be communicated again at a later date.

Cardoso is expected to review the macroeconomic direction and outlook for the Nigerian economy at the event, where private sector operators are hoping for hints of the CBN’s thinking on the economy.

Mr. Cardoso is scheduled to address bankers and other public and private sector stakeholders at the annual Bankers Dinner themed “Governor’s Day” to be held in Lagos. This will give the governor an opportunity to address stakeholders on economic and financial market developments during the year and the economic outlook for next year.

The dinner and 60th anniversary celebration will attract more than 500 banking industry leaders, influential business leaders, and government officials. Vice President Senator Kashim Shettima and Lagos State Governor Babatunde Sanwo-Olu are also expected to join Cardoso at the event. The social event has emerged as an opportunity to get CBN chiefs to make high-priced statements on policy issues and economic prospects. The last few years.

There is no indication yet whether Cardoso intends to continue his 18-month campaign to raise rates or pause it. Inflation has jumped from 16.8% to 27.3% since the campaign began, but October figures show month-on-month growth has slowed. This indicates that the current momentum of the inflation rate is weakening.

Experts argue that using the money base to control inflation is largely inefficient, as only a small proportion of the population and businesses have access to bank loans, and require central banks to do more to combat inflation. We are asking them to reconsider their approach. Last year, members of the Monetary Policy Department held a retreat in Lagos to assess the possibility of switching to inflation targeting as a new approach to price checking.

Commenting on the stalled MPC meeting, investment banker Tolulope Alayande noted that the current government’s instability goes far beyond the financial sector and includes fiscal policy. He expressed dissatisfaction with the apex bank governor’s tight-lipped attitude about his own plans in certain areas.

“What aspects of Emefiele’s policies will this administration maintain? Which way will it go? Nigerians and investors need to know the direction. Stabilizing the economy during the COVID-19 pandemic There are a lot of initiatives that Emefiele has put forward to get the government going. We need to know the details. Where is this CBN governor going? How is he going to get there? These are the concerns,” he said. Stated. Ande Mohammed, a former banker, believes that the MPC structure as currently constituted may not be what Tinubu wants.

“I would like to say that there may be plans for a reconfiguration of the MPC by the government. That is the only way that can explain what is happening. If the government is confident in the policies currently in place, “Why not allow the meeting? This is not good for the economy. The MPC has many functions. Its announcements are closely related to things like economic stability,” he said.

Professor Godwin Oyedokun of Lead City University said: However, the program is in the evening. He has three clear days to prepare for that night. To me, abdicating national mandates to specialized institutions is clear irresponsibility. ”


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