In the bustling economic landscape of Nigeria, renowned economist Bismarck Rewane has been a vocal advocate for a more proactive stance by the Monetary Policy Committee (MPC) of the Central Bank. His call for more frequent meetings beyond the mandated four times a year is grounded in the urgency to curb the galloping inflation, a matter he emphasized during an appearance on Channels Television’s Sunrise Daily breakfast show.Thank you for reading this post, don't forget to subscribe!
Rewane’s insights shed light on the intricacies of the MPC’s role as an independent committee, composed of both central bank insiders and external experts. Disagreeing respectfully with the governor’s stance on the minimum meeting frequency, Rewane pointed out the nearly 30% surge in inflation over seven months since the last meeting in July. He stressed the need to convene more often to address the multifaceted issues contributing to the economic challenges.
As the discussion unfolded, attention shifted to the forthcoming MPC meeting in February. Rewane highlighted the importance of addressing the root causes of inflation, such as money supply, diesel prices, and exchange rate fluctuations. The looming expectations of a significant interest rate hike, as projected by Bloomberg, prompted a nuanced discussion about the effectiveness of such measures in stabilizing the economy.
Concerns about the MPC committee’s composition were raised, questioning potential changes and the timeline for appointments and confirmations. Rewane underscored the committee’s independence and vital role in achieving macroeconomic stability.
The conversation pivoted to the central bank’s shift to an inflation-targeting framework. Rewane explained the framework’s significance in anchoring expectations using the MPR as a nominal anchor. He delved into the complex economic factors, including the drastic increase in money supply, diesel prices, and exchange rate depreciation, which necessitate a granular approach in MPC deliberations.
Shifting gears, Rewane addressed the recent developments in the energy sector, particularly the commencement of production at the Dangote Refinery. Clarifying that the refinery was yet to release products into the market, he highlighted the anticipated positive impacts on supply, pricing, and inflation moderation.
The interview concluded with a forward-looking perspective on Nigeria’s energy sufficiency. Rewane expressed confidence that with the full commissioning of the Dangote Refinery, Nigeria would become self-sufficient, capable of servicing the entire Western and Central Africa region. Drawing parallels with the cement industry’s transformation, he acknowledged concerns about prices but emphasized the role of guaranteed supply in stabilizing logistics and moderating inflation.
In a broader context, the interview provided a comprehensive narrative, intertwining economic complexities, policy considerations, and the transformative potential of key industrial developments in Nigeria’s journey toward stability and self-sufficiency.