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Why We Can’t Cut Interest Rate Now- Emefiele

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… CBN, Crypto Consulting, others parley on digital currency

BY BUKOLA IDOWU, Lagos, MARK ITSIBOR and EJIKE EJIKE, Abuja

Despite the several calls from the real sector for a cut in the benchmark interest rate, the governor of the Central Bank of Nigeria, (CBN) Godwin Emefiele has reiterated the decision of the apex bank to hold rates saying a cut in rates would cause the economy to sink further into recession.

Speaking at 2017 annual general conference of the Nigerian Bar Association in Lagos, yesterday, Emefiele stated that cutting the Monetary Policy Rate which is currently at 14 per cent would swell the volume of money supply in the economy and cause a spike in inflation rate.

The apex bank had kept benchmark interstitial rate at a high of 14 per cent since last year. Emefiele explained that with the crash in global oil price, Nigeria at some point was a simultaneous case of falling GDP Growth, rising Inflation, persistently High Interest Rates, falling foreign exchange  Reserves and a depreciating Exchange Rate.

He noted that “in view of the dilemma of tackling these problems simultaneously, the optimal solution would be to prioritise and address them sequentially. Given our core mandate, and the pervasive effect of high inflation and exchange rate volatility, we chose to tackle these two head-on.

“It is important to highlight that high inflation is a significant inhibitor of economic growth. High inflation is not only harmful to growth in the long run, it discourages saving and inhibits planning and investment as people become more skeptical on the direction of prices of goods and services.

Meanwhile, in a bid to forestall losing out of the benefits of the most potent currency in the world, the CBN, Crypto Consulting Ltd and other stakeholders on crypto currency met to seek ways of exploiting the benefits of crypto currency.

Speaking during a two-session workshop on business intelligent consulting in Abuja organised by Crypto Consulting Ltd, which was attended by interested investors from Abuja and environs, Crypto Consulting chief executive, Solomon Esor said the stakeholders’ meeting with CBN featured comments from players in the virtual currency space which bordered on exchange, wallets providers, miners, transaction service providers, software developers and users.

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