CBN may retain lending rate as MPC meets today
Amid the economic crisis caused by the naira redesign policy and the lack of fuel, the Monetary Policy Committee is scheduled to begin its two-day discussion on the economy on Monday (today).
According to local analysts, the Central Bank of Nigeria and the MPC might not increase lending rates following the Monetary Policy Committee meeting.
Even though Godwin Emefiele, the Governor of the CBN and Chairman of the MPC, has stated that having an inflation rate that is much higher than the Monetary Policy Rate is bad for the economy.
The 290th MPC meeting will take place on Monday (today) and Tuesday, according to the information posted on the CBN website.
The committee decided to keep the CRR at 32.5%, raise the MPR by 100 basis points to 17.5%, maintain the asymmetric corridor of +100/-700 basis points around the MPR, and keep the liquidity ratio at 30% during the most recent MPC meeting in January.
A former President nt, the Association of National Accountants of Nigeria, Dr Sam Nzekwe, said, “With what happened from January till now, it is as if everything has been at a standstill, the economy has not been moving at all because there has been no cash among others. I don’t think they are going to make any changes because there is no basis to change anything.
“The only thing they need to do is how to bring liquidity into the system for people to have money to commence their activities because it is like restarting the economy.”
Also, the Managing Director of the Cowry Assets Management Limited, Mr Johnson Chukwu, said the CBN might retain the MPR because it did so in its January meeting.
According to analysts at Greenwich Merchant Bank, at the MPC meeting, “It is expected that the committee’s hawkish stance will continue, given its resolution to restore price stability.
“However, the committee members will be wary of current events in the United States’ financial sector due to the recent collapse of Silicon Valley Bank and Moody’s downgrade of the US banking system.”
Analysts at Cordros Research stated that “Looking ahead, we believe investors will focus on the outcomes of the bond auction and the MPC meeting scheduled to hold next week to gain further clarity on the movement of yields in the fixed-income market.
“If the MPC increases the benchmark policy rate and there is a passthrough impact on yields in the fixed income market, there could be a realignment of investments between markets that would pressure the performance of the equities market.
“As a result, we expect cautious trading from domestic investors in the short term. Overall, we reiterate the need for positioning in only fundamentally sound stocks as the uninspiring macro story remains a significant headwind for corporate earnings.”
