CBN’s failure to hold policy rate meeting in two months draws intense focus

The Nigerian central bank’s decision not to hold its monetary policy committee this week has deepened uncertainty over how its new governor plans to tackle the currency crisis in Africa’s biggest economy.

According to Semafor, an online medium it was the second time the meeting failed to take place since Yemi Cardoso took office in September.
It also comes against a backdrop of chronic dollar shortages that have pushed down the value of the naira and driven galloping inflation.

President Bola Tinubu moved decisively in his first weeks after coming to power in May to roll out investor friendly reforms. He removed a costly fuel subsidy and allowed the naira’s value to be market determined. Godwin Emefiele, who as central bank governor implemented unconventional policies, was replaced with Tinubu’s choice, Cardoso, a former chairman of Citibank Nigeria.

But, two months into his tenure — a long time for global investors — Cardoso is yet to hold a meeting of the bank’s monetary policy committee (MPC). The meeting typically culminates in the governor announcing the decision on the main lending rate and policy plans. The meetings are usually held every two months. A meeting had been due to take place on Monday and Tuesday this week, according to the central bank’s website.

Comparisons have been drawn with Kenya’s central bank governor, Kamau Thugge, who was appointed in June and hiked the country’s main interest rate by 100 basis points in an unplanned meeting one week after taking office, prompting a dip in inflation.

“You can engender investor confidence by having predictable policies and knowing the central bank’s plans,” said David Omojomolo, Africa economist at Capital Economics in London. “We haven’t got a clear sense of what Cardoso is trying to achieve.”

The apex bank did not respond to a Semafor Africa request for comment about the meeting.

Nigeria’s inflation rate rose for a tenth month in a row in October to 27.33%, the highest in 18 years. Economists broadly agree the orthodox way to tackle price rises would be to raise the benchmark interest rate