‘CBN Not Controlling Interest Rate’ — Leadership Newspaper
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‘CBN Not Controlling Interest Rate’

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The Central Bank of Nigeria (CBN) has said it does not control interest rate as claimed by some people. The bank explained yesterday that interest rate is determined by market forces.
CBN’s director, Monetary Policy department, Mr Moses Tule said the focus of the apex is in three aspects: interest rate, inflation and exchange rate out of which he said the CBN concentrate on inflation, bringing down inflation and stabilising the exchange rate. “The market determines what the exchange rate is, so it is not within the power of the CBN to control interest rate,” Tule said on the sidelines of the First Professor Uche Uwaleke colloquium as the first professor of capital market in Nigeria. The colloquium was tagged: “Fiscal and Monetary Policies for Deepening the Capital Market in Nigeria”. He however acknowledged that “when we reduce the MPR, the way the micro economic fundamentals are today, you are going to have the impact of that in higher prices.”

The convener, Professor Uwaleke said the conference was for economic and financial experts to rob minds on the challenges faced by the Nigerian Capital Market operators. The unsystematic risk is very high, Uwaleke remarked at the event which took place in Abuja, yesterday.
Asked what can be done to improve the development of the Nigerian Capital Market, Tule advocated for structural and fiscal policies. He said structural policies will help to work on key issues in the economy including improvement in infrastructure. “There is also the urgent need to put in place and improve the issue of rule of law and contract within the systems if those issues are done and confidence built over time; certainly investment will come,” he said, adding: “On our own part, the CBN has tried to stabilise the exchange rate and you can see it has created a buffer – we have external reserve of $48billion.”

Uwaleke who said only about 166 companies are listed on the floor given her size as a country with the biggest economy in Africa with market capitalisation of only N13.7trillion, said CBN can play the role of market maker of last resort for the market.

His concern is that the market is tight to the apron string of foreign investors “Anytime the foreign investors cough, we catch cold. When they exit the market, we start having problems. If you observed the market did very well in January 2018, when we recorded as high as 16% in return but as we speak, all those gains have been eroded. Today, returns is in the negative territory and that can’t continue.”

Former director-general of SEC, Dr Suleiman Danusa chaired the colloquium. He said: “I am happy that a colleague of mine has become a professor.’’ He also said that he looks forward to see the Nigerian universities have a department of capital market. He also want the nation’s universities have adjoin professorship of capital market.



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