By Amaka Agwuegbo
The recent reduction in the Monetary Policy Rate and the liberisation of the foreign exchange market has been described as a good development as it would stimulate growth in the real sector of the economy.
The chairman of the Nigerian Shareholdersâ€™ Solidarity Association, NSSA, Mr. Timothy Adesiyan, said that with the reduction, the real sector of the economy will witness massive growth and development as more people will invest in manufacturing and production.
â€œThe reduction in MPR will promote the industry as more people will have access to funds. This is because since people are apprehensive of the interest rates of banks, they will have more funds to invest in the real sector.â€
Continuing, he said â€œSince the money to be loaned out will come from depositorsâ€™ money, the interest rates for the depositors would be reduced, making them not to take their money to the banks.â€
Two weeks ago at the 64th Monetary Policy Committee meeting in Abuja, the CBN governor, Lamido Sanusi, said that to ensure cheaper supply of funds to banks by the Central Bank of Nigeria, the Monetary Policy Rate (MPR) was reduced from 8 per cent to 6 per cent.
According to Sanusi, â€œSince only a minority of banks are fully compliant to the 22 per cent cap earlier put by the Bankersâ€™ Committee, in collaboration with Soludoâ€™s regime, the Committee has, therefore, removed the cap.â€
He also pointed out that the overnight placing must not be higher than 200 basis points, which is 2 per cent above the MPR of 6 per cent, unless for tenors of 30, 60 and 90 days, which could attract a maximum spread of 300, 400 and 500 per cent basis points.
The NSSA chairman, Adesiyan, also said that the liberisation of the foreign exchange market will help make more funds available for people dealing in the forex market. This is because the operators and private individuals will have more access to more funds.