SWITZERLAND, JULY 18 – Financial experts have highlighted the need for the Monetary Policy Committee of the Central Bank of Nigeria to further reduce the benchmark lending rate to alleviate the challenges incited by COVID-19.
At the last MPC meeting, the CBN reduced the Monetary Policy Rate to 12.5 percent from 13.5 percent.
It however retained the Cash Reserve Ratio and the liquidity ratio at 27.5 percent and 30 percent respectively.
A former President of the Association of National Accountants of Nigeria, Dr. Sam Nzekwe, said, “We are in COVID-19 season and economic activities are almost at standstill. We expect that the interest rate should be further reduced because the business is very dull now.
“If we still have high-interest rates, this will make the cost of production very high, and most people don’t have money to buy, which will further complicate the economic problems we have.
“I believe they should be able to reduce the interest rate further and they should reduce the CRR so that the banks will have more money and be able to give loans.”
While noting that the CBN was trying to avoid inflation, he said that people had become poorer with COVID-19, but it was important for banks to have more money to lend.
The Director-General, Chartered Insurance Institute of Nigeria, Mr. Richard Borokini, said, “The interest rate is much lower in some developing countries; it is less than two percent in some countries
“They (MPC) need to ensure that the cost of borrowing should not be too high, thereby making it difficult for people to service,”he said.
The experts spoke to a Punch newspaper correspondent ahead of the MPC meeting scheduled to hold in Abuja on Monday.