Prof. Sheriffdeen Tella, a Senior Economist at Olabisi Onabanjo University, Ago-Iwoye, Ogun, has said that the marginal reduction in the lending rate to 13.5 per cent was too low to impact the economy.
Tella told journalist on Tuesday in Lagos that the CBN should look for a more proactive way to turn the economy around.
Newsmen report that the CBN rose from its Monetary Policy Committee (MPC) meeting reducing the Monetary Policy Rate (MPR) from I4 per cent to 13.5 per cent while maintaining other monetary policy parameters.
Newsmen further report that the apex bank had held the MPR unchanged for two years.
The Don urged the CBN to create incentives for expansion in the economy.
”Reducing the MPR to 13.5 per cent is too low to bring about any relief to the economy as it were.
”The CBN should rather increase incentives for expansion in the productive sector of the economy,” Tella said.
The economist faulted the decision of the government to increase income tax, adding that it would create more problems.
Tella said that the CBN should encourage investment in the power sector as it had the capacity of creating employment, while in turn would yield more tax for the government.
Newsmen report that the CBN retained the Cash Reserves Ratio (CRR) at 22.5 per cent, liquidity at 30 per cent and Asymmetric corridor at +200 and -500 basis points around the MPR.
”The committee felt that given the relative stability in the key macroeconomic variables, there is a need to signal a new direction and in which case we are talking about being pro-growth.
”In its argument, the committee was convinced that doing this would further uphold the bank’s commitment to promoting strong growth by way of encouraging credit flow to the productive sector of the economy,” the CBN said. (NAN)