Akindele: 150bps MPR hike aggressive

The Central Bank of Nigeria's recent Monetary Policy rate hike has been described as an aggressive move by analysts, sparking concerns about the country's economic future. Speaking at CNBC Africa's MPC Announcement Day Coverage, industry experts Kayode Akindele, MD/CEO of Coronation Capital, Emmanuel Odiaka of ECOB Capital, and Bismarck Rewane of Financial Derivatives highlighted the need for fiscal discipline, addressing current FX misalignment, and driving confidence in Naira assets. Akindele emphasized the necessity for fiscal authorities to supplement the aggressive monetary policy, noting that businesses are facing tough times and require additional support. Odiaka acknowledged Governor Godwin Emefiele's commitment to tackling inflation and supporting the currency, while Rewane raised concerns about the lack of a specific inflation target and the importance of distinguishing between liquidity and income. One key issue discussed during the interview was the link between currency devaluation and food inflation. As the Naira weakens, farmers find it more profitable to export food, leading to supply shortages and driving inflation further. Additionally, concerns were raised about the need for coordinated efforts between monetary and fiscal authorities to address structural issues fueling inflation. The interview also touched on the impact of the rate hike on businesses and the stock market. Akindele warned that tight monetary policies could increase corporate mortality and impair bank incomes, highlighting the need for a balanced approach that combines aggressive monetary measures with fiscal discipline. Emefiele's cautious approach to discussing foreign exchange inflows was noted, with experts highlighting the importance of building confidence in Naira assets to stabilize the currency. Despite recent fluctuations in the exchange rate, there is still a long road ahead to achieve stability and restore investor trust in the Naira. Overall, the discussion underscored the urgent need for a comprehensive strategy that addresses both monetary and fiscal challenges. Analysts called for greater collaboration between the CBN and fiscal authorities to implement effective policies that will drive economic growth and restore confidence in the Nigerian economy. As the country navigates turbulent economic waters, a united front from all stakeholders will be crucial to overcoming the current challenges and setting the stage for sustainable progress.