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The Central Bank of Nigeria will frustrate the economic growth recorded since 2020 if interest rate is increased above 11.5 per cent, the Chief Executive Officer of Cowry Asset Management Ltd Johnson Chukwu has said.
With the market already expecting higher inflation, there are expectations that the apex bank may raise interest rate to curb high prices.
Nigeria’s Monetary Policy Committee has already begun a meeting on Monday and will make its decision public on Tuesday.
But Chukwu said on AIT programme, ‘Moneyline With Nancy,’ on Monday that he expects the MPC to hold the rates and focus on factors that would drive growth in the Nigerian economy.
Nigeria’s inflation is at 15.63 per cent as of December 2021 ending consecutive months of plunge. This is a major concern for the CBN.
Chukwu said, “I don’t think there will be any interest rate increase at the general meeting. I believe the MPC will want to adopt a wait and see attitude.
“It might be pre-emptive if they want to take a position now and that position be the most appropriate position giving that a lot of factors are going to be involved.”
The United States Federal Reserve will meet this week to decide the path for its tightening of monetary policy to control rising inflation.
There is panic on the part of different Central Banks on the outcome of the meeting.
The US is expected to adjust interest rates four times this year to save the dollar.
The CEO said, “But they have not started and you are not sure of when they are going to start that. But until they take that decision, if you try to make any preemptive move, you are likely going to increase the rate in the country.
“And of course, increasing the rate in the country could also lead to a slowdown in economic growth rate and you don’t want to step on the brace of economic recovery at the time when the factor that will compel you to step on the brace have not been put in place.
“So, I think the most logical thing they will do is to allow the rate to remain as it were at the current meeting.”
