CBN Likely To Retain Lending Rate As MPC Meets Today

By Clement Alphonsus

The Monetary Policy Committee is expected to begin its two-day meeting on the economy on Monday (today) amid the economic crisis fuelled by the naira redesign policy and fuel scarcity.

Analysts in the country have said the Central Bank of Nigeria and the MPC may not raise the lending rates at the end of the Monetary Policy Committee.

The CBN had disclosed on its website that it will hold its 290th MPC meeting on Monday (today) and Tuesday.

At the last MPC meeting in January, the committee voted to raise the MPR by 100 basis points to 17.5 per cent; retain the asymmetric corridor of +100/-700 basis points around the MPR; retain the CRR at 32.5 per cent; and retain the liquidity ratio at 30 per cent.

A former President, 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, considering the fact that it did so in its January meeting.

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.”