The Governor of Edo State, Godwin Obaseki, has faulted the Central Bank of Nigeria for raising the Monetary Policy Rate by 22.75 per cent.
Obaseki contended that the decision is not the answer to the ongoing economic challenges in the country.
He supported boosting local production to meet the demand for goods and services.
The governor gave this opinion in a speech as a guest speaker during the Annual Dinner of Edo Zone Bankers Committee in Benin City, the Edo State capital, as shared in a video posted on his official Twitter account on Monday.
He said, “I understand that the monetary rational for increasing MPR but fundamentally and fiscally, it is not going to lead to growth in our economy.
“We must focus on the fundamentals which is increasing production, making sure our citizens produce the goods and services we consume and depend less on import.
“Our economic policy and monetary policy cannot be determined by exchange rate alone. So, this whole issue of increasing the cash reserves in a bid to tighten liquidity is going to be detrimental to our economy. I understand the challenge the monetary authorities face but unfortunately you cannot plan with one hand.
“The economy is about the fiscal and monetary policies, both must work hand in hand and when they don’t, as they don’t in Nigeria, we will have crises. So, we should focus on fiscal issues so that we can grow our economy out of the challenges we have.”
Last week, the Central Bank of Nigeria’s Monetary Policy Committee raised the benchmark interest rate by 400 basis points to 22.75%.
The CBN Governor, Olayemi Cardoso, revealed this during the announcement of the first MPC meeting of the year in Abuja on Tuesday.
Cardoso said the committee voted to adjust the asymmetric corridor around the MPR to +100 to -700 from plus 100 to -300 basis points and raised the cash reserve ratio from 32.5 per cent to 45 per cent.
The MPR has been 18.75 per cent since the last MPC meeting between July 24 and 25, 2023.
With inflation at 29.90 per cent, Cardoso mentioned that the latest MPR adjustment is aimed at addressing the country’s inflation rate.
Obaseki added, “We should not panic too much because of foreign exchange, we must focus on how we can do things within our economy, how we can grow our economy to earn more foreign exchange. Foreign exchange is our problem, but I believe that creating jobs for young people should be more of a priority for us a people at this time.”