 Now, thecipian has consistently and proactively addressed the country's inflationary pressures through a series of monetary policy adjustments. Since May 2022, thecipian has embarked on a strategic path of tightening and elevating the NPR from 11.5 percent to 18.75 percent by July of last year. Now, the series of rate hikes was in response to escalating inflation levels signaling the central bank's resolve to combat inflationary pressures and stabilize the economy. Now, International Finance and Economic Analyst, Mokhtar Mohamed, joins me now to discuss more on this. Good morning to you, Mokhtar. Thanks for joining us on Business Insights. Good morning, Justin. Okay, let's try to understand and maybe justify thecipian's reason for this increase, because I've been getting reactions concerning that. Now, the governor pointed out that the committee's resolution was primarily influenced by the urgent need to address the ongoing inflationary pressures, the volatility in the exchange rate, and the anticipation of further inflation coupled with rising inflation expectations. Do you agree with this? Is this the panacea that we are seeking since June of last year? Thank you, Justin. You said it June of last year. And at the June of last year, the United States inflationary pressure was about 10 percent. The U.K. was almost having about 11 to 12 percent. And what they did was to hike rate, hike rate, hike rate did what they have to do because of the peculiarity of the economy. And today, the U.K. is doing about 4 percent. The United States is about 3.1 percent in inflationary pressure. And we keep hiking rate, keep tightening, tightening. And we've gone from that 18 percent. That's what June of last year to a high of about 29 percent now. And then we're still going high. And so when you look at that policy and say that we do power that address inflationary pressure, that's not address inflationary pressure because in the short, the medium and the long term, it seems not to be working. I've said it over and over. Why do you just copy and paste? Because every CBN about the world are tightening. We are not looking at the peculiarity of our own environment to say, look, do you have to tighten now? Or do you not have to tighten now? So I think for me, tightening is not a solution to our problem because again, our inflationary problem is driven mostly by three majors. Because as you see, as the cost of production is high, you know why cost of production is high. Most organizations and most companies provide power for themselves because of energy is high. This is selling for a high of about 1,500 naira a liter. So that will make it the cost of production will be high. Then when you look at the demand and supply, the demand and supply of some particular goods, especially imported goods into this country is still high. So definitely FX rate volatility will come into play. So the cost of those goods will be high. Then totally again, you look at microeconomic induced inflation, like what we have seen the CBN doing now, what they have done. They've tightened it. They had a high interest rate, they've tightened it. And so what happened, the cost of funding, the cost of borrowing is high. So what you see again is a lot of businesses are not able to pay up their debt or the banks will not be able to loan to them any longer. That is microeconomic induced inflation. And so you tell someone, those are the three major debt, the one that have been owned very well has been the FX induced inflation whereby the FX rate has moved as of June last year of 450 to a high of 1,500 at the close of the autonomous foreign exchange market. So all these issues cannot be addressed by just a remover of tightening or hiking rates. There are other reasons why Nigeria will have names for meditations. Multidimensional poverty. So we need to have come with a multidimensional approach which must be an approach that is home driven. Okay. So Mokta, I want to really understand something. I want you to just really break it down because from the simple economics that I know from a corona one and the little I did in high school the purpose of all of this is to discourage people from burrowing in the bank thereby reducing cash in the circulation. But let's look at some scenario right now from what we see, Nigerians have been looking at other means to get in monies with all of those loan apps and all of that. So the purpose of reducing the cash in circulation also be defeated. Right now what happens through personal and interbank loans as well? Okay. When you talk about monitoring rates, I mean, more public liquidity, I think they've been able to do that if you look at what the Syrians have been able to say. They've been able to more public liquidity out of the system. And when you more public liquidity is to encourage savings and investment you are discouraging burrowing. But like I said with somebody talking how many Nigerians have money to save and how many of them are thinking of investment. Because some of this policy that they've just brought in favours investment climate are investing in the equity market which may experience some lose between now and the next one week or two weeks but then there will be price correction of maybe then the price will now start moving again so definitely you could say that. Now when you look at Nigeria and you look at what the Syrians are trying to using that tool to control inflation opening up liquidity and then striving businesses of cash. What you're going to ask is that how much cash have businesses been able to to get to do their businesses. And again, when you look at that policy what's going to cause that? Those that have already borrowed from this bank that means their cost of burrowing has gone high and so when they are not able to pay because they're earning the ability of Nigerians are low because of their or this inflationary pressure that we see exchange rate volatility like I said so what will happen is that non-performing loan in the financial sector will go up and like you're probably pointed out most of them will not look for other means to go to make sure they make ends meet. Now the whole idea of this was if you have money you need you know as time driving into investment maybe safer investment like Treasury B that have moved from a low of about 6% to a high of about 22.7% that is where you want to move it to but again how many was able to save at that time so how are you going to save but you don't even have enough to cater for your needs so that's why I say some of these policies that we are trying to come up with are policies that are just not working in our own environment because of the precarious nature of our environment. Okay it's good you talked about investment and people not really having money to even feed not to talk about having spare to invest because ordinarily to reduce cash and circulation you have to incentivize people to invest that they have to get high returns you know someone had told me that we might see an increase in rates for term deposits for call rates or tables any of that going to be happening anytime soon? Yes I think for the TV we already seen it's a like I said a low of about 16% I mean 9% 10% to a high of about 22% and so we'll see that play out in that space but the beauty about it is that most of the people that are playing on that TV also have missed so much money in the equity market so what you're going to see is that when the TV face is not going to be polished but the equity market will be experiencing some sluggish bearish runs because most of them will be moving their money from there because of most of the CBM policy that favour fixed income to equity trading so definitely yes I can say that's what's going to happen. Okay fine Mota in all of this now we are doing the textbook approach we are copying and pasting we are not really hitting the core issue what should we be doing because as it is right now there are protests here and there NLC had a protest yesterday and they called it off and they are even saying that it was effective in your opinion first was the protest rather effective are we going to see the federal government working in the line of reducing the economic hardship because as it is right now everyone is practically bearing the brunt if we are not doing the right thing if we are just following the textbook approach what does all of this leave us and what exactly should we be doing? Okay what I will say is that was the strike protest effective I think it was because of the government coming out to say look where we have met almost every demand that shows that the protest was effective even if the Nigerian Labour Congress have said that you have not met all our demands so definitely they will go to the joint board and send a message to the government because this time around every Nigerian wanted to be involved in it and I am happy that the government got the language and then amended their way and said look we are meeting a lot of demands already so for me I think that is a good a good way to say okay we have gotten to that what was the second question? The second question was like see if we are going by the textbook approach and yeah this textbook approach is what for me is not working like I have said we have been doing it over and over and over and over it is not working so what should we be doing right? I can say they have done one thing right as strike peace today that was improving liquidity supply to the to the market especially the FX market especially the retail FX market where they have given a lot of the exchange about 100, 300, 1,353 people to change will be having the FX from the federal government today but like I always say about them it is sometimes they come up with a policy and after making a pronouncement how are we going to implement this and that is the challenge that is what speculators always niche on to make your policy statement of no effect because now the same CBN have said look we are going to make sure we regulate BDCs and are going to be having capital base of 2 billion now tier 1 BDC and then tier 2 BDC in all of this BDC they are giving FX how many of them are tier 1 or how many of them are tier 2 so you could see that it shows like you just get a panic set in then you come up with an improv solution to see how you can arrest the situation that you have created with your pronouncement and that is one secondly you said that most of them are going to change now if I am traveling you will give me not more than $4,000 another $4,000 about they will just allow me have only $500 the 3,500 will be excited in my cart now how much of this you have given this form have that technology online technology to do what you say you want to do because what is the best time to say that we want to digitize as far as we can make cash less possible so you see that you are addressing the issues but again the in depth the root cause of what you said you want to address it seems to be abandoning for the short time measure so I hope that is just a short time measure they will not say okay because as it is now in the 2 billion capital base of for me that is where they got it injected liquidity not even at $1,500 at $1,300 now it will cause panic to the speculators one thing speculators one thing that speculators thrive on is fear and greed and one thing you use to cause confusion in the means of speculators is the same fear and greed so they will be they will be fear now for them to bring out some of their liquidity to the market so we might see the narrative going further down but that depends on how much success the current CBN drive to the Burundi change hope we are not having this list and at the end of today the Burundi change are still waiting to get those supplies from the CBN the final question on the economic hardship right now we have talked about the monetary policy of the central bank of Niger and of course the forex and regime another issue that came up just yesterday was the law makers still in a way to cushion the effect of all of this hardship they were asking the federal government to adopt the food stamp approach how do you react to that and you see we must know that there is a separation of you don't just come out of the legislator you could only suggest to the government that this is the way you want them to do it and then both of you could sit down and find it back and practically it works they are even saying that they want to be taught the green, the strategic green reserved and said it would be open and green to Niger has not even come up to this moment so the one that they have even pronounced we have not seen the result in it and now you are coming up with this other one I think we must try to to make sure that there is a clear court strategy on ground before you come up with pronouncements on issues that have to do with food security I think my take is that they should make sure they have a clear court policy not because a food stamp is working in America then you think it will work in Niger I keep saying our environmental rates are very different in terms of data gathering how many people do we know how many rich people do we have how many people are earning if you look at all these things this is what would normally necessitate food stamp or that but in Nigeria somebody can even be earning more and still have food stamp because we don't have a clear court strategy so for me I think would you work on that first before coming up with policy statements thank you so much Mokta for your time for all of the wonderful imputes that you always bring on the show do appreciate it thank you Justin alright that's the size of the show for today my guest Mokta Muhammad is an international finance and economic analyst and we have been looking at the state of the economy vis-a-vis the MPC meeting that just was run of yesterday and of course the protest and how Nigerians are coping thank you for being a part of the show I am Justin, I'll see you again next time, bye for now