MPC embarks on retreat ahead of monetary policy decision Monday

Ahead of the Monetary Policy Committee (MPC) meeting on Monday and Tuesday the Central Bank of Nigeria (CBN) and the MPC members have embarked on a retreat to come up with new ideas and tools to aid monetary policy implementation for optimal macroeconomic outcomes.

The MPC meeting for the month of July is scheduled to be held on Monday and Tuesday in Abuja, where the members of the committee decide the direction of cost of borrowing and other macroeconomic indicators.

This comes as the monetary policy has been severely challenged, as its policy space narrowed significantly, in some cases, paradoxically and necessitating the need to rethink monetary policy in the context of emerging challenges and economic transformation, according to Godwin Emefiele, governor of the CBN.

“After the meeting, we will see a new improved monetary policy and a new improved Central Bank,” Emefiele, who chairs the MPC, said.

“While the Nigerian economy has been engulfed with many crises, just like many other countries of the world, we have been able to relatively withstand the storm and have performed far better than many of our pairs, courtesy of our bespoke and ingenious approach of adopting well thought out and home-grown policy measures to address our macroeconomic challenges,” he said.

He commended the choice of the theme for the retreat ‘Monetary Policy Implementation in a Digitally evolving Developing Economy’, saying the evolution of FinTechs, Cryptocurrencies, Digital Payments, Artificial Intelligence and Machine Learning, have changed the functioning of the financial and banking sectors, both globally and domestically.

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“Therefore, the urgent call for the need to rethink financial system regulation, supervision and monetary policy implementation. While the innovations come with a lot of risks and uncertainties for the sectors, they also have many benefits for positive economic transformation and particularly, financial inclusion which has been the principal catalyst for inclusive growth, poverty reduction and employment generation,” he said.

According to him, the Central Bank of Nigeria has championed the financial inclusion principle to achieve the SDGs, including the recent launch of the eNaira (CBDC) to capture the large unbanked populace into the formal sectors and also improve monetary policy efficiency and positive impact on the better standard of living for the population.

Speaking further, he said, “indeed, while post-COVID growth recovery in Nigeria can be adjudged to be moderate and stable, we have seen a major change in the key sectoral drivers of that stable growth phenomenon, including the services sector, modernised agriculture, and manufacturing, suggesting that technology and innovation is playing a major role in output growth and economic development in Nigeria. Hence the need to explore new ways of adapting monetary policy tools to improve the contribution of technology and innovations to the growth equation.”