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LCCI urges MPC to prioritise FX policies for economic growth

…commends policy retention decision

The Lagos Chamber of Commerce and Industry (LCCI) has urged the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) to prioritize policies and conditions relating to foreign exchange (FX) for improved economic performance.

In a public statement reacting to the MPC’s recent meeting, the LCCI noted that the application of FX policies wields a significant effect on economic performance and the confidence of investors.

“The forex policies are as important as liquidity management concerns and the Foreign exchange framework is key to the price stability mandate of the CBN,” said the statement signed by Muda Yusuf, director-general of the LCCI.

Yusuf also stated that the divergent position of the country’s fiscal and monetary authorities on foreign exchange policy framework is a cause for concern because it dampens investors’ confidence and stifles investment inflow.

“This lack of coherence among policymakers sends a negative signal to the investment community aggravates uncertainty and undermine the confidence of investors,” Yusuf said.

“It is important for the fiscal authorities, CBN and Economic Advisory Council to be on the same page as far as the country’s foreign exchange policy framework is concerned,” he said.

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The chamber also commended the committee’s decision to retain policy parameters in its recently concluded meeting.

According to the chamber, the policies of the committee are being influenced by the need to strike a balance between stimulating output growth and curbing intensifying inflationary pressures.

“Considering recent macro developments in the economy, holding policy stance seems to be most appropriate decision at this moment, we believe sustained intervention efforts of the Bank would further enhance credit flows to the real economy, stimulate output growth and ultimately moderate inflationary pressures,” Yusuf said.

In its second meeting of the year, the MPC of the Central Bank of Nigeria retained the Monetary Policy Rate (MPR) at 11.5 percent, the Cash Reserve Ratio (CRR) at 27.5 percent, and Liquidity Ratio at 30 percent.

According to Godwin Emefiele, the CBN governor, the bank’s current policy focus anchors on boosting output growth given the fact that the domestic economy narrowly exited recession in the fourth quarter of 2020.

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