A former Director of Research, Central Bank of Nigeria, Dr Titus Okunrounmu, has said continuous increase in the Monetary Policy Rate by the bank’s Monetary Policy Committee will not help the economy grow.

Mr Okunrounmu spoke to journalists on Wednesday in Ota, Ogun State. 

He spoke while reacting to CBN governor Olayemi Cardoso’s announcement of the increase in MPR from 22.75 per cent to 24.75 per cent after its two-day Monetary Policy Committee meeting on Tuesday in Abuja.

MPR is a short-term, often overnight rate that banks charge one another to borrow funds.

Mr Cardoso announced the rise in a communiqué he read at the 294th meeting of the MPC.

Mr Cardoso also announced on Tuesday in Abuja that the MPC adjusted the asymmetric corridor to +100/-300 basis points around the MPR and retained the cash reserve ratio at 45 per cent.

The former CBN director said the MPC of the apex bank was looking at the available data to make key decisions but it was not making the economy grow because no one would be willing to borrow at a higher interest rate.

He added, “The continuous raising of MPC is not helping the economy because everybody is crying and who wants to borrow at 25 per cent. That is the question we should ask ourselves, apart from looking at the data, as lowering the rate would have helped the economy to grow.”

He appealed to the Federal Government to effectively use the funds borrowed from the CBN on capital projects, as they were also borrowing at a higher interest rate.

The former CBN director appealed to the government to redouble its efforts towards looking for alternative sources of power supply in the country.

He said that with a stable power supply, the productive sector would be able to produce sufficient goods for both local consumption and export purposes.

He said this would in turn generate foreign exchange for the country and reduce pressure on the currency.

Mr Okunrounmu said it would also drastically bring down the inflation rate and stabilise the foreign exchange.

(NAN)