Prof. Uche Uwaleke, an economic expert says that a tight monetary policy was detrimental to an economy in recession.
Uwaleke, the Head of Banking and Finance Department, Nasarawa State University, said this in an interview with the News Agency of Nigeria (NAN) in Abuja on Tuesday.
He, however, said that the measure taken by the Monetary Policy Committee (MPC) to retain Monetary Policy Rate (MPR) was expected, being the first meeting of the year.
“The ‘do nothing’ option adopted by the MPC this time was expected, being its first meeting this year.
“It was the same case this time last year when the MPC chose not to tinker with the rates in January 2016.
“ In view of an inflation rate as high as 18.55 per cent in Dec. 2016, up from 18.48 per cent in Nov. when the MPC last met, the justification for further tightening of policy presented itself,” he said.
According to him, the decision not to do so is therefore remarkable when the current economic recession is factored in.
“With this stance, the economy continues to throttle slowly towards recovery.
“The lack luster performance of the stock market will continue, at least in the near term with investors’ sentiments more in favour of government high-yield securities,” Uwaleke said.
NAN reports that the Nigeria MPC on Tuesday after the end of its first meeting for 2017 in Abuja, retained a 14 per cent MPR.
The Governor of the Central Bank of Nigeria (CBN), Mr Godwin Emefiele, said the decision was reached after the committee members considered the economic outlook of Africa’s largest economy. (NAN)