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Ahead of today’s
meeting of the central bank’s (CBN) rate setting committee (MPC), we
couldn’t have had a more useful intro, than the comments recently
attributed to the governor of the central bank on the likely direction
of the policy rate.

In an interview
with Bloomberg News in Basel, Switzerland, last week, Sanusi Lamido
Sanusi apparently saw scant new economic evidence in support of a
change in the policy rate.

According to the
CBN’s governor, “A rate cut at this particular moment in time doesn’t
appear to be necessary. There is no compelling imperative at this point
to review the interest rate stance”.

My first reaction
was to wonder at the rationale for the Monetary Policy Committee’s
meeting today. If a rate change is not imminent, and the CBN had gone
ahead to let this be known, how much of today’s meeting will be useful,
and how much just plain beautiful?

In respect of the
latter portion of this question, the meetings of the rate-setting
committee are statutory. So, there will always be a beautiful aspect to
its being convened. It helps that someone is attentive to the letter of
the law. How helpful such attention is to the spirit of the law is of
another level of difficulty altogether.

Here, there is a
sense in which the CBN governor’s utterance may have been antithetical
to the thinking behind the MPC being statutorily required to meet
regularly. One of the reasons for a regular meeting schedule, and its
advertisement, is the role that such certitude plays in anchoring
market expectations.

On this basis, it
is moot, whether by anticipating the result of this meeting the
governor has introduced a level of uncertainty into the policy-making
environment.But that he has introduced a fair level of confusion into
the process, there can be no doubt.

Are we now to look
to catching the central bank governor ahead of the rate-setting
committee’s meeting to get a sense of the policy direction? Or may we
still await the release of the communiqué after each MPC meeting? It
helps to remember that the communiqué was not always about the decision
on rates.

Of late, the
central bank has tried to use the rate-setting committee’s platform to
address the challenges of liquidity confronting the financial services
industry. And at its last meeting, it even went ahead to join the
ongoing debate over responsibility for kick-starting the economy, by
clarifying the distinction between monetary and fiscal policies, and
the effects of these on the process of credit creation.

Ordinarily, the MPC
meeting’s communiqué is a lot more useful for the insight it provides
into the thought processes behind its decisions. Arguably, the
communiqué could be a lot more useful down this path, including for
example by letting the public know who voted for and against the
respective decisions. But to the extent that one obtains a sense of
where the economy is at, and might be headed from reading the
communiqué, it has been handy.

As it is, the most
recent official data on the economy is for April this year. Against the
fact that in an economy where near-term volatility is a fact of daily
life, three months old data doesn’t even have a mantelpiece value, some
of us still look to the communiqué for its use of more recent economic
data.Then, there’s the chore of making sense of the economy.

Talking to those
who know, I’m told that two things matter here. The fact that
agriculture contributes a big chunk of domestic output; and the huge
weight of food in the inflation basket. These two dimensions of our
national life are so distant in their dynamics from the financial
services sector, that it does not help for an understanding of the one,
to look too hard at the other.

Consequently,
despite some of the loosest monetary and fiscal policies in recent
times, inflation is trending downwards. Some of us had also thought
that by now we ought to have started seeing signs of new lending. The
Banks’ need to repair their loan books was always going to be a let on
new loan book growth.

But it was almost
certain that in an election year, the fiscal account would have come
under pressure from the need to spend. It was inevitable thereafter
that some of this new infusion of cash would have driven demand for
credit.

Unfortunately, none of this has happened and we look to the MPC for useful explanation.