By Bamidele Obafemi
The cost of doing business in Nigeria especially as it concerns raising capital to fund business may remain an unending burden as the Central Bank of Nigeria (CBN) maintains its base lending rate at 12 per cent. However, the Monetary Policy Rate (MPR) which represents the least cost of fund (cost of accessing loan) by commercial banks from the CBN may rise higher, given a corridor of +/-200 basis points allowed.
It was the decision of the Monetary Policy Committee (MPC) of the Apex bank which held its meeting in Abuja today.
Meanwhile, Sanusi Lamido Sanusi, Governor of the CBN who also presided over the meeting said majority of the committee members who took the decision did so because of the current inflation level in the economy. “Given the stability achieved in the last twelve months with average year-on-year headline inflation rate at 12.24 per cent, in 2012, the MPR of 12 per cent was considered to be just right”, he said.
Sanusi explained that argument by a minority of the MPC to slash MPR by 25 basis points considering benign inflation outlook other things being equal was eventually knocked out because of fear of increased government spending due to forecast rise in oil revenue which may trigger inflation in the long run. The US debt ceiling with possible impact on commodity prices was another reason given by the Apex bank to continue to maintain status quo in lending rate in the country.
“In view of the foregoing, the Committee decided that it was prudent to hold and monitor developments between now and the next meeting of the MPC”, Sanusi revealed.
Meanwhile the implication of this for business owners who run on borrowed fund is that there won’t be any relief in the area of high interest rate until March when the MPC meets again to review developments in the first quarter of the year. For the consumers too, higher inflation is imminent as prices of goods may hit the roof in the meantime.