Matilda Omonaiye/
As the Monetary Policy Committee (MPC) gears up for its meeting tomorrow and Tuesday, only three possible outcomes are on the horizon: an increase, a decrease, or maintaining the interest rates.
However, political economist Prof. Anthony Kila suggests that none of these outcomes will significantly impact the majority of Nigerians.
“I recommend that the MPC pauses its interest rate hikes, but regardless of their decision, it won’t matter much to most people in the country,” Kila said.
In well-structured and advanced economies, MPC meetings are often met with anticipation and hope, as their decisions on interest rates ripple through various sectors like finance, retail, and real estate, affecting almost everyone. Unfortunately, this isn’t the case in Nigeria, where a large portion of the economy operates outside the scope of interest rate policies.
“The only rate that affects most Nigerians directly is the foreign exchange rate, which the MPC cannot significantly influence,” Kila added.
Kila also highlighted a key issue in the current system: the inflation rates used by the MPC for analysis don’t accurately reflect the realities that Nigerians face in their daily lives. He argued that the MPC’s interventions often feel like academic exercises, only making a difference to a small minority.
“For the MPC to have a meaningful impact, the Central Bank of Nigeria (CBN) must acknowledge these limitations,” Kila advised. “It’s crucial that the CBN reviews its metrics for inflation, growth, and other economic indicators. Additionally, it should make interest rates more relevant to everyday Nigerians by improving consumer finance processes and allowing fiscal policies to play a more significant role in the economy.”
Prof. Anthony Kila is a Director at the Commonwealth Institute and a renowned political economist.
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